More than 300+ guests and industry professionals came together under one roof for iPartners Conference: The Future of Private Markets on Thursday, 12 October at the Ivy Ballroom.

Five key takeaways from the conference:

Manager Selection Dispersion:  Selecting and accessing the highest calibre managers of capital is of utmost importance to achieving investment outperformance.  There are significant long-term differentials between the top tier and the mass market when it comes to risk-adjusted returns.  

The importance of cash flows, the consistency of coupons, has risen: In light of the uncertain macro environment, investments that are providing cash flow certainty that meet investor’s target returns are being highly sought after.  Knowing you have an income stream being generated when capital is being put to work does reduce uncertainty and volatility, with allocators looking to reduce market risk assets like equities and property, and replacing them with well-structured debt.

60/40 asset allocations are finished:  The traditional 60/40 investment philosophy being 60% equities and 40% fixed income, has been questioned for years but there is now widespread consensus it’s unviable.  Investors have moved to a priority on diversification where alternatives play a role, and they are placing higher value on consistency of income streams.    

Sectoral preferences are important: The strongest asset managers have specified sectoral preferences, avoiding areas of the markets that are most vulnerable particularly in slowing economies.  In consumer lending avoiding debt exposures to the most vulnerable is important, whilst the resources sector generally comes with higher levels of volatility.    

Rising allocations to alternatives is being assisted by company preferences to stay private:  The IPO market still remaining mostly closed is assisting the theme of companies staying private for longer.  Some companies are also considering staying private forever, as it allows all decision making to be long-term focused for the business.  Private credit and private equity is gaining a broader landscape of choice for where to consider allocating capital.