We provide some detail on the outlook and opportunities across the real estate, private equity/venture capital, private credit, infrastructure and agriculture asset classes.
The first half of the year saw some dislocations in pricing which began to close with some vendors and buyers of private market assets bridging expectations and becoming more willing to complete deal transactions. As a consequence, transaction activity has picked up amongst private market buyers while public market activity shows tentative signs of recovery from a recent pickup in non-mining initial public offerings.
An allocation to private markets can not only enhance total returns but also smooth the overall investment path by providing additional sources of returns. Partners Private continue to look for attractive investment opportunities with attractive risk / return characteristics. Below we provide some more detail on the outlook and opportunities across some of the private asset classes we cover.
Amongst the ongoing uncertainty that investors are facing, we remain convinced that including an allocation to private markets can not only enhance total returns but also smooth the overall investment path. We continue to look for attractive investment opportunities that offer both portfolio diversification and attractive risk/return characteristics. While private markets are often seen as a single investment option, it is important to note that return dispersion tends to be relatively high across these assets compared to public market equity and bond strategies. Therefore, a disciplined and rigorous due diligence processes combined with sector selection and partnerships with experienced investment managers is crucial for investment success.
For most of the past year, investors grappled with elevated levels of uncertainty. While the Australian and US economies managed to (so far) avoid an economic hard landing, persistent inflation and higher interest rates remained a concern for capital allocators. In this environment, investment portfolios that included exposure to alternative asset classes tended to deliver higher and more consistent returns. For 2024 and beyond, we expect long-term structural trends to support further growth across private markets with opportunities from repricing persisting in the coming years.
Economic developments over the last month have included sticky inflation, the fear of a wage-price spiral and a return of central banks hiking interest rates. These all weighed on public and private markets at the end of the second quarter.