Outlook 2022: Private Assets

Fuelled by Covid-induced monetary and fiscal stimulus, as well as strong past performance, interest in private assets has been rising sharply. We expect this to continue. This has brought fund raising levels in some areas significantly above their long-term trend. Typically, such a situation can put pressure on vintage year performance expectations.

We therefore believe that the illiquidity premium is under pressure whilst other private asset-specific drivers of outperformance - such as the complexity and size/smaller investment premia – remain intact. In such an environment, our view is that – besides adherence to a long-term strategy and investment discipline - there are three main determinants of success:

  1. High level of selectivity

  2. Focus on the complexity premium

  3. Diversification within private assets

To achieve all three, it is especially important to make use of the full breadth of the private asset universe and its different size categories; what we refer to as the long tail of private assets. We observe that certain trends that were already in play have been accelerated by the pandemic. The coming 12 months may see a further rapid advance towards the next phase of the private assets industry - what we refer to as “Private Assets 4.0”.

As we look to 2022, we explain what this new era means for return generation, risk management, sustainability, and the democratisation of private assets.

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Outlook 2022: Private Assets 26 pages | 2,352 kb