Consider this…

Dispersion of Returns by Strategy: Older vs. More Recent Vintages

When constructing a portfolio, investors must be mindful of developing risk and return assumptions that encompass data across historical periods. The evaluation of strategies in relevant time periods and the application of forward-looking investments can help guide judgement on portfolio construction and performance expectations.

Vintages since 2010 feature a higher proportion of unrealized gains, emphasizing the importance of assessing fund age and its potential impact on an overall portfolio. These differences across strategies and vintages underscore the significant spread between top and bottom-performing managers, which present both opportunities and risks for investors.??

Across asset classes, spreads have consistently remained wide over industry history, suggesting that despite the growth of the industry, equity markets have not become more efficient by this measure. Certain strategies can exhibit a greater dispersion of returns across market cycles, offering substantial long-term return potential. This draws attention to the intricacies of portfolio management and underscores the critical role of thorough analysis and forward-looking decision-making to meet investment needs.

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Definitions

All Private Markets: Hamilton Lane’s definition of “All Private Markets” includes all private commingled funds excluding fund-of-funds, and secondary fund-of-funds.??

Credit: This strategy focuses on providing debt capital.?

Distressed Debt: Includes any PM fund that primarily invests in the debt of distressed companies.?

Growth Equity: Any PM fund that focuses on providing growth capital through an equity investment.??

Infrastructure: An investment strategy that invests in physical systems involved in the distribution of people, goods, and resources.?

Mega/Large Buyout: Any buyout fund larger than a certain fund size that depends on the vintage year.?

Natural Resources: An investment strategy that invests in companies involved in the extraction, refinement, or distribution of natural resources.??

Origination: Includes any PM fund that focuses primarily on providing debt capital directly to private companies, often using the company’s assets as collateral.??

Private Equity: A broad term used to describe any fund that offers equity capital to private companies.??

Real Assets: Real Assets includes any PM fund with a strategy of Infrastructure, Natural Resources, or Real Estate.??

Real Estate: Any closed-end fund that primarily invests in non-core real estate, excluding separate accounts and joint ventures.?

Secondary FoF: A fund that purchases existing stakes in private equity funds on the secondary market.??

SMID Buyout: Any buyout fund smaller than a certain fund size, dependent on vintage year.?

Venture Capital: Venture Capital incudes any PM fund focused on any stages of venture capital investing, including seed, early-stage, mid-stage, and late-stage investments.?