Expect more down-rounds in venture capital, according to KPMG, for the remainder of 2022. Longer-term, however, expect fundraising to continue at an impressive rate, especially in sectors such as consumer-driven business models, alternative energy, and artificial intelligence/machine learning.
Authored by Aaron Filbeck, CAIA, CFA, CFP®, CIPM, FDP
So *awkward laugh*… how about that market? When it rains, it pours, and that’s exactly what has happened across the board in most public markets around the world this year. Even if we go down further, returns this year have been headline-worthy. In the U.S., a simple search of the term “60/40” brings up articles with an addendum of “faces worst year since 1936.” As the kids say these days … big yikes.
“You make most of your money in a bear market; you just don't realize it at the time.”
– Shelby Davis
The good news is that most asset classes have been repriced and look far more attractive than they have in years (who knew bonds were so interesting!?). The bad news is … well, most of us have experienced that repricing in real time. However, market performance is yesterday’s problem – it’s already happened. So, what do we do about it? Where are the opportunities? And how might the events of this year impact the next few?
As we reach year-end, we’ll start hearing from the major asset managers and banks as they begin updating their long-term capital market assumptions. The consensus is bound to be anything but boring. In most markets, we seem to have shifted from “which asset class isn’t priced to perfection?” to “which asset class should I choose from? There are so many!” If we zoom out, future returns across the board, especially in private markets, look attractive again…at least in nominal returns (didn’t want to inflate your expectations too much!). We’ve even seen some early evidence in some initial updated capital market assumptions.
So, let’s ask again … how about that market?
We hope you enjoy this month’s edition of Chronicles of an Allocator. While none of us have a crystal ball and can perfectly predict the future, diversification is a long-term value proposition that’s showing its benefits today. In this newsletter, we’ve compiled a short collection of articles that we hope will help you take advantage of the chaos while simultaneously improving long-term outcomes.
