Asset Managers Are from Mars, Investors Are from Venus (Part 1)

I feel I have been thinking about this for a long time and hinted to at least part of it here and there…. But I realize I have never spelled it clearly, or not in a language that would have been easy to understand for everyone.

No Robo No Cry

It’s been a while since a good piece of thought leadership stroke a chord with my musical memory. But that happened this morning, when I read this on LinkedIn, shared in my network, from the March 25^th issue of The New York Times: Why I Don’t Make Financial Decisions on My Smartphone.

PE Duration Disambiguated (Smooth Capital)

Getting responses to questionnaires is an art and I can’t say I master it. Nevertheless, I had a few especially kind readers of my previous post who contributed their opinion (thanks!) to the embedded polls. Their results make it more interesting and “independent” to define “surprising” certain different data available in the industry.

What’s Up with Private Markets’ Secondary Prices?

There are some confusing messages out there about private markets’ secondary prices that are worth distilling to identify latent signals of opportunity and risk.

Coller’s IRR Card [More Subtly Fooled #2]

If there’s an iconic badge for private equity valuation this is probably Coller Capital’s IRR and compound interest “cheat sheet” Card.

IRR Alpha Looks Bigger [More Subtly Fooled #1]

When a standard of measurement of returns allows close to 70% of investment managers (GPs) to claim their funds are first quartile performers (i.e. ranked in the top 25%) (1) – such as the case of the IRR – something is obviously wrong.

Fooled by IRRs (Yale, Schwarzman’s Cases)

“Everyone loves an optical illusion, except when it comes to financial results (1)”. Yet the private markets are not immune from optical illusion risks.

The Price of Private Funds Is Less Wrong

If Prof. Malkiel had taken his “Random Walk” in Midtown Manhattan, the private capital industry’s enclave, he could have found that prices can be “less wrong” there than down Wall Street – to a level that could offer, over the life of a private fund, reasonable arbitrage opportunities but not without risk.

Private Capital Beta: Theory Reloaded

In a recent Financial Analyst Journal article titled “Do (Some) University Endowments Earn Alpha?” the authors find that endowments mostly fail to deliver alpha and what looks as alpha can be almost totally explained by the inclusion of alternative investments in a static asset allocation. Digging further, the authors find that there is no strong statistical evidence of selection skill relating to the private equity and hedge fund portfolios.