Some private capital fund managers are marking down portfolios more in line with public market prices, while others have yet to do so.
Institutional investors are waiting with trepidation and a little hope for markdowns, and seeing a wide dispersion of performance in their private market assets, particularly real estate, because managers differ in their approach to pricing. A wide range of returns can be seen within the same asset class and similar investment strategy.
While most expect investors’ private capital portfolios in real estate and private equity to eventually be written down between 10% to 15%, investors won’t know for sure for a year, or maybe longer.
“I don’t think I’ve seen a year where we’ve seen such a dispersion of returns within asset classes,” said Molly Murphy, CIO of the $20 billion Orange County Employees Retirement System, Santa Ana, Calif., at the Feb. 22 investment committee meeting.
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