Allocating to Private Markets with Hamilton Lane Chairman | #𝗦𝗔𝗟𝗧𝗡𝗬 | Summary and Q&A

TL;DR

Retail investors are increasingly gaining access to private markets, which have proven to outperform public markets over the past 20 years.

Key Insights

• ✋ Private markets have consistently outperformed public markets over the past 20 years, making them an attractive option for retail investors seeking higher returns.
• 🧑‍🏭 Private market valuations are more sophisticated and consider factors beyond just market multiples, making them less susceptible to immediate market volatility.
• 🙇 Retail investors are increasingly gaining access to private markets, thanks to regulatory advancements and the success of retail products offered by companies like Blackstone.
• 🔒 The allocation to private assets should be balanced, with a mix of private equity, private credit, and infrastructure, to generate liquidity and higher returns.
• 🍉 In the short term, there might be inflation and interest rate pressures, but in the long term, these are expected to ease, benefiting private markets.
• 💗 The private credit market, including venture debt, is growing as companies seek alternative funding options to bridge their needs without diluting equity.
• 😘 While a recession is always a possibility, current indicators suggest that the private markets are healthy and performing well, with low default rates.

Transcript

foreign with the the serious hearty Souls who really want to hear about allocations private markets in such a difficult environment we were talking backstage a bit about how everybody has been talking today about the fact that retail is you know going to be where the the action is in terms of allocations to private markets you have the advantage of... Read More

Questions & Answers

Q: Why have retail investors shown interest in private markets?

Retail investors are attracted to private markets because they offer higher returns compared to public markets, as demonstrated by the performance over the past 20 years. These markets also provide access to growth and smaller companies that are not easily accessible in public markets.

Q: How do private market valuations differ from public market valuations?

Private market valuations are more sophisticated and rely on factors such as the performance of underlying companies rather than just market multiples. While public markets have seen declining valuations, private markets have been able to offset this decline with strong company earnings.

Q: Have private markets seen any impact from market volatility?

Private markets have been relatively resilient to market volatility. While there may be some impact on growth markets due to companies raising more money than needed and facing a bid-ask spread, buyout portfolios have seen increased performance, largely offsetting any decline in multiples.

Q: Is there a risk of too many products flooding the retail market?

The gatekeepers in the industry, such as investment advisors and wealth managers, are experienced and knowledgeable about the private markets. They are well-equipped to evaluate and select high-quality products, reducing the risk of bad products flooding the market.

Summary & Key Takeaways

• Hamilton Lane has been working with high net worth individuals and family offices to invest in private markets, both in the US and internationally.

• Private markets have consistently outperformed public markets, making them an attractive option for growth and smaller companies.

• While valuations in public markets have come down, private market valuations are more sophisticated and have not been as heavily impacted.