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Private equity can provide hedge for investors burned by public markets in 2023, say fund managers
- Investors are likely to allocate a larger chunk of their portfolios to private assets this year, according to fund managers
- Yet the global slowdown and monetary tightening are likely to weigh on private investments too in 2023
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Private assets are likely to prove more attractive to investors this year as they can serve as a hedge against volatility in the public markets such as stocks and bonds, according to fund managers.
The private market, comprising investments such as private equity (PE), venture capital and private credit, will offer greater stability and better valuations, said Karen Tse, principal of London-based Coller Capital, which has a focus on the secondary market for private assets.
“Interest rate hikes will result in continued volatilities in the public and private markets,” she said in an interview. “As the speed of change in private market valuations is slower than in the public market, the private market will be more attractive.”
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The global economic slowdown will generate further headwinds affecting corporate earnings, which could further roil stock markets this year, she said.
Her view was supported by a survey by Coller based on the views of 112 private equity investors across the world.
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As mainland China reopens, what is the market outlook for the mainland and Hong Kong?
As mainland China reopens, what is the market outlook for the mainland and Hong Kong?
Some 52 per cent of limited partners based in the Asia-Pacific region viewed private equity as more attractive, against the backdrop of climbing interest rates. The US Federal Reserve is expected to raise rates further, at least in the first half of 2023.
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