Michael Mauboussin - Pattern Recognition and Public Markets (EP.370)
Capital Allocators – Inside the Institutional Investment Industry
Understanding the Historical Attention on Asset Classes
Asset classes like buyouts and venture capital historically gained attention due to deteriorating prospective returns in public markets after the financial crisis. Investors sought higher returns to meet liabilities, prompting them to move towards riskier options like buyouts and venture capital. Factors contributing to the attractiveness of buyouts include lower interest rates, favorable exit multiples, and the assumption of flat or increased exit multiples. The sustainability of these advantageous conditions in the future remains uncertain, potentially impacting returns going forward.
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