Implications for Investors
Investors in private markets need to be aware of the differences in valuation methodologies between public and private markets to properly assess the performance of their portfolios. During times of sharp economic downturns, investors will not see the full impact on their private investments for several months. Conversely, it may take longer to see gains during the recovery. A proper evaluation of performance requires patience and an understanding that immediate feedback will not always be available. However, the reporting lag has historically been worth the wait, as private markets have demonstrated the ability to deliver outsized returns with lower levels of volatility than public markets.
Dan Fletcher and Nick Veronis are vice president, research and due diligence and co-founder, managing partner, respectively, of iCapital Network, a digital alternatives investment platform.