April 2024
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Designed to serve as your primary source for navigating the world of alternative investments.
For the third consecutive year, global secondary transaction volume exceeded $100 billion. That momentum is largely due to the abundant growth in the primary private equity market and limited partner (investor) demand for liquidity following two years of muted exit activity.
General partners (GPs) are increasingly looking at secondaries to provide liquidity for their limited partners (LPs), while LPs are embracing the market as an effective portfolio management tool. In fact, we believe the sustained size of secondary deal activity has established secondaries as central to how the private markets function. So much so that secondary funds, or funds that acquire pre-existing investments of private equity portfolios, are now an increasingly popular investment option within the private wealth channel.
Private equity secondaries may offer investors a particularly attractive entry point, or discount, relative to primary private equity funds because of their unique risk and return profile. In addition, secondaries are generally well diversified and typically provide a faster return of capital, relative to primary private equity funds. These factors can be particularly enticing for investors that are newer to private equity.
Given the role that secondaries now play in the private markets – and the number of asset managers that are expanding their secondaries business with strategies to grow their presence in the private wealth channel – we expect the appeal of the asset class to continue to broaden.
Thank you for your continued partnership and support.
Chart of the Month
Recent Years Have Seen Record Secondaries Transactions and Available Capital
Annual Secondaries Transaction Volume and Available Capital
Secondaries have achieved record transaction volumes, and all signs are pointing to more activity ahead. Dedicated available capital has doubled over the last six years to over $250 billion, or 2.3x the transaction volume in 2023, pointing to a sufficient amount of dry powder.
Spotlight: Beyond 60/40: Episode 18
Anastasia Amoroso, iCapital Chief Investment Strategist, discusses investor demand for hedging and protection strategies with Amy Wu Silverman, Managing Director and Equity Derivatives Strategist at RBC; and explores iCapital’s new strategic relationship with Morningstar with Vimal Vel, Chief Product Officer at Morningstar.
Monthly Market Roundup
Higher interest rates have pressured real estate prices, but fundamentals remain stable across most property types. In this whitepaper, Apollo examines the state of the real estate market and discusses the opportunity in real estate debt in light of wider spreads, more lender-friendly terms, and significant refinancing needs.
There is broad agreement private credit has experienced significant growth. Ares reviews why this asset class is getting more attention than ever, defines the five distinct sub-sectors, and shares the? frequently asked questions they receive on private credit.
In recent years, private equity fundraising has surged, yet exits slowed drastically in 2022, prompting institutional investors to rebalance portfolios through increased secondaries activity. Franklin Templeton explores secondaries and why they may represent an attractive and growing opportunity to access the private equity ecosystem.
In Case You Missed It
Learn what alternative investments can offer to investors and the role specific asset classes and strategies play in a portfolio. Read more.
Discover how private credit funds generate enhanced risk-adjusted returns and current income. Read more.
See the questions investors should consider before deciding if an alternative investment may meet their individual needs and objectives. Read more.
Wealth Management Invest Podcast
Listen to David Bodamer and Lawrence Calcano, Chairman and CEO of iCapital, explore the complexities of alternative investments, examine recent developments at iCapital, and discuss how advisors are integrating these assets into their offerings for amore diversified investment approach.
Market Pulse
Despite a recent rocky move for equities, the semiconductor space should remain in the spotlight and help refocus views on the AI backdrop. We expect near-term cyclical drivers such as the destocking of semiconductor inventory combined with multi-year AI compute and data center growth to provide further support for the space and additional upside for chip stocks. Learn more in Chief Investment Strategist Anastasia Amoroso’s latest Market Pulse.
New at iCapital
We are thrilled to unveil The 19th Hole: Beyond the Green, an engaging video series hosted by Lawrence Calcano, Chairman and CEO of iCapital. The 19th Hole showcases casual conversations with today's most distinguished leaders and entrepreneurs as they delve into their unique stories. Watch our premiere episode with Jack Nicklaus, legendary golfer, business leader, and philanthropist.
Note: Also available via Apple Podcast and Spotify.
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ALTERNATIVE INVESTMENTS ARE CONSIDERED COMPLEX PRODUCTS AND MAY NOTBE SUITABLE FOR ALL INVESTORS. Prospective investors should be aware that an investment in an alternative investment is speculative and involves a high degree of risk. Alternative Investments often engage in leveraging and other speculative investment practices that may increase the risk of investment loss; can be highly illiquid; may not be required to provide periodic pricing or valuation information to investors; may involve complex tax structures and delays in distributing important tax information; are not subject to the same regulatory requirements as mutual funds; and often charge high fees. There is no guarantee that an alternative investment will implement its investment strategy and/or achieve its objectives, generate profits, or avoid loss. An investment should only be considered by sophisticated investors who can afford to lose all or a substantial amount of their investment.
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