The recent uptick in massive buyout funds will likely continue for as long as private equity firms are able to continue turning huge pools of capital into plentiful profits. https://files.pitchbook.com/website/files/pdf/PitchBook_3Q_2018_US_PE_Breakdown.pdf iCapital and iCapital Network are registered trademarks of Institutional Capital Network, Inc. Additional information is available upon request. 6 0 obj endobj endobj endobj endobj (19) GMO, as of September 30, 2018. https://www.advisorperspectives.com/commentaries/2018/10/23/gmos-7-year-asset-class-forecasts-still-favor-emerging-markets-over-u-s-stocks Breakdown. (13) Bain Private Equity Report 2017. https://www.bain.com/insights/global-private-equity-report-2017/ 2019 saw $393bn in buyout deals and $224bn in venture capital deals announced, compared to $493bn and $271bn respectively in 2018. Find out what alternative investment funds are available for your clients. And U.S. regulators are considering ways to allow more ordinary investors into private funds, which could create a fundraising windfall for alternative-investment firms. <> 51 0 obj 25 0 obj Can private equity narrow clients’ retirement savings gap? This was boosted in part by sky-high valuations, which saw the average buyout deal size hit a 10-year high of $490mn. This should encourage investors to continue allocating to private markets, with manager selection remaining the critical driver of returns when choosing a fund. The first is that overall private equity investment activity, in terms of both deal number and value, has been running at significantly lower levels than we saw in 2006 and 2007, as shown in figure 3. Some LT CMAs have more bearish return projections, with GMO’s latest seven-year asset class forecast anticipating a recession and consequently negative returns for the public markets: a -5.2% return for U.S. large caps, a -2.1% return for U.S. small caps, and a 0% return for U.S. bonds.19, When compared to the above public market assumptions, PE remains highly attractive on a relative basis. <> Lawrence Calcano discusses PE in retirement plans in @finplan: https://icaptl.net/319lHnH. <> 3: Global Private Equity Dry Powder by Fund Type, 2006 - 2018 71%69% 71% 69% 66% 64% 63% 65% 64% 62% ... reports/Private-Capital-Dry-Powder-January-2019 Author: Preqin Selected Created Date: This is in line with the 18.6% pooled net IRR that U.S. buyout funds posted for the 12 months ending June 2018.17, These lower IRRs represent lower returns — on an absolute basis — than the industry generated in prior decades, but we believe PE should significantly outperform public equities on a relative basis over the next decade. Public pension funds, stung by declining yields on traditionally safe assets, continue to increase their allocations to private equity and other alternative investments. There are several other key metrics that distinguish today from the 2006–2007 boom. 16 0 obj (7) PitchBook, The Rise and Rise of Private Markets; McKinsey Global Private Markets Review 2018. https://www.mckinsey.com/~/media/mckinsey/industries/private%20equity%20and%20principal%20investors/our%20insights/the%20rise%20and%20rise%20of%20private%20equity/the-rise-and-rise-of-private-markets-mckinsey-global-private-markets-review-2018.ashx

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