In an era when the number of listed companies continues to fall, the CIO Private Markets Perspectives & Allocations Series report from PM Alpha notes that traditional investor portfolios in 2022 generally experienced one of their worst years in decades, with investors now facing recession risk in both North America and Europe, alongside global inflationary pressures.
In response, those such as wealth managers should consider a significant re-balancing of portfolios on behalf of clients, with PM Alpha recommending a 10%-60% portfolio allocation to private markets.
According to PM Alpha analysis, there has been a near halving of the number of publicly listed US companies since the late 1990s, with companies staying private for longer, coupled with greater value creation happening pre-IPO.
Alexis Weber, CIO and Founder at PM Alpha has outlined core macro drivers, and hence private markets opportunities in 2023 as being:
· The Great Correction
o Disclocations from assets repricing
o Corporate financing drying up
o Consumer expenditure retracting
· Inflation Era
o Higher inflation risk
o Increased cost of capita
o Shifts in monetary policy
o Consumer liquidity squeeze
o Rising energy costs
· Income Gap
o Search for compelling yield
o Protecting from inflation
o Alternative sources of yield
Alexis Weber, CIO and Founder at PM Alpha.
Tom Douie, CEO and Founder of PM Alpha.