Monetary Matters with Jack Farley Geopolitical Uncertainty is Freezing Private Capital | John Bowman of CAIA
Mar 18, 2025
John Bowman, CEO of the CAIA Association, dives into the complex world of alternative investments. He highlights how geopolitical factors, especially tariffs, have significantly influenced private equity assets. Bowman discusses the resurgence of hedge funds and warns of potential shifts in private credit markets. He also emphasizes the challenges posed by high borrowing rates for smaller companies and shares insights on the evolving venture capital landscape, particularly in sectors like AI and blockchain.
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Challenges in Alternative Investments
- The alternative investment landscape is becoming increasingly complex due to the convergence of traditional and alternative asset management.
- Geopolitical uncertainty, particularly tariff wars, adds to this complexity by creating unpredictability in the market.
Geopolitical Impact on Private Capital
- Geopolitical uncertainty, like tariffs, impacts private capital markets by creating uncertainty and potentially limiting investment options.
- This can lead to localization of investments, hindering diversification and potentially impacting long-term returns for investors.
Geopolitical Uncertainty and Capital Lockup
- Locking up capital for 8-12 years in private equity/debt funds becomes risky during geopolitical uncertainty.
- Limited partners may hesitate to invest due to potential constraints on capital and returns, impacting long-term outcomes.