Private-market assets not a panacea for returns

INTEREST in private-markets investing has never been greater. Mutual fund giants are partnering some of the best-known names in private assets, and are rolling out funds that retail investors can access.

But pointed questions are also being raised – more so at this time than before – on whether private-market assets can live up to the hype going forward. They are not a panacea for returns, and tend to underperform in a bull market.

The late David Swensen, who helmed Yale’s endowment fund for over 30 years, pioneered outsized allocations into private assets. Yale’s allocation into alternatives (alts) remains outsized, at more than 80 per cent. One-year returns up to June 2024 came to 5.7 per cent after fees. It has lagged against a strong showing by US stocks.