To say that 2020 has been an unusual year would be an understatement. We’ve experienced a global pandemic, a new normal for work and school, Zoom enthusiasm (and fatigue), devastating wildfires in Australia and the Western US, political unrest in major US cities throughout summer, the worst day ever for the Dow Jones stock market on March 9 and a highly contentious US election season, the implications of which will likely reverberate for years.
From a regional standpoint, LP allocations to US private equity, venture capital and infrastructure strategies were relatively steady despite weaker investment and realization activity. In comparison, new commitments to Asia-focused GPs were more muted because of the early impact of COVID-19. But LPs benefitted from hedge fund alpha generation as well as more robust investment activity from existing private market funds as the region rebounded from the pandemic sooner than other parts of the world.
European fundraising and investment activity, however, has remained sluggish. Globally, hedge funds and real estate strategies appear to be well-positioned to capitalize on post-COVID changes in consumer and business behaviors, which will give rise to more distinct winners and losers.
In this edition of our annual Challenges piece, we outline some of the issues we believe LPs will want to follow closely if they wish to optimize their portfolios.
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We invite you to join the discussion on optimizing your portfolio and what the coming year holds for private markets. If you have any questions, reach out to your Mercer consultant or complete the contact form below.