Pockets of opportunity in private-market assets

PRIVATE investments are often viewed as alternative or non-traditional investments, compared to public assets such as stocks and bonds.

It was not until when the late David Swensen, former chief investment officer of Yale’s University’s endowment, posited an outsized allocation of 40 per cent higher or even more in alternatives in the 1980s for investors with a long-term investment horizon, that large institutional investors included private assets as a meaningful part of their strategic asset allocation.

Swensen demonstrated that alternatives such as private assets might outperform most traditional assets over the course of the full economic cycle – thanks to what is known as the illiquidity premium from investing in alternatives managers, as well as the power of compounding returns.