Stableton’s Post

Private markets have always been a bit of a black box, but lately, the box has been getting shaken up. Rising interest rates, asset repricing and lack of liquidity have already forced investors to reassess their private market investments—something I talked about in a recent post. But there’s another piece of the puzzle that needs equal attention: fees. Management and performance fees might not grab headlines like big market moves, but they’re just as important in shaping outcomes, especially in today’s environment where every basis point counts. With returns under pressure, fee structures that worked in the past are getting a harder look. Investors are asking tougher questions, and GPs need to bring their A-game to justify their costs. Fee pressure isn’t new, but it’s evolving. And if you want a glimpse of where this might be headed, just look at public markets. ETFs, once a niche product, are now a cornerstone of the investment world. Their rise was driven by cost efficiency and transparency, forcing traditional asset managers to adapt. That shift didn’t happen overnight, but it fundamentally changed the game for traditional asset managers. Could core-diversified private market funds be next in line? It’s a question worth pondering. The challenge, of course, is transparency—or the lack of it. Unlike public markets, where you can easily compare fees and performance, private markets often feel like a maze. This opacity slows progress and keeps investors from making fully informed decisions. That’s why efforts like Callan’s "2024 Real Assets Open-End Funds Fees and Terms Study" are so important. Aaron C. Quach and his team have done an incredible job breaking down how fees and terms stack up across real assets funds. It’s the kind of work we need more of—helping LPs and GPs see the bigger picture and pushing the industry toward greater alignment. As private markets mature, there’s no doubt that fees, transparency, and investor alignment will take center stage. Just like in public markets, the winners will be those who can adapt to these shifts. And hey, if low-fee ETFs can go from niche to dominant, who’s to say private markets can’t find their own version of that story?

You may have been reading articles like this one that contain quotes such as this: "Passive investment products have long been pulling in the lion’s share of money from investors, but as 2023 came to a close they achieved a milestone: holding more assets than their actively managed counterparts." https://buff.ly/3UxQDdk Now, more than ever, guidance on how to effectively use passive investment opportunities to find financial freedom is critical. If you are ready to get started, I can help. https://buff.ly/3Owm0St 📩 Drew@StartingPointCapital.com

The Evergreen Evolution: Transforming Private Markets with Perpetual Capital Private markets are undergoing a fundamental shift towards evergreen fund structures which will reshape how investors engage with alternative assets. Traditionally reliant on finite-life, drawdown funds, private markets are now embracing perpetual capital, offering longer-term horizons and more flexible liquidity features for investors. 📈 Key Trends Driving Growth: Perpetual Capital's Appeal: With an estimated $400 billion in assets under management, evergreen funds are gaining traction due to their ability to provide sustained, compounding returns while avoiding the limitations of sporadic fund launches. Private Wealth Expansion: The private wealth channel—estimated at $450 trillion in net assets—is the next frontier. Historically limited by accessibility and high investment minimums, this segment is expected to channel trillions into private markets over the next decade. Technology & Access: Emerging tech platforms are democratizing private markets, enabling smaller GPs to compete with large, name-brand GPs in accessing private wealth. 💡 What This Means for Investors: Evergreen funds provide LPs with a simpler, more efficient way to manage private market allocations. This structure offers continuous investment opportunities, compounding returns, and flexible liquidity features, making it more attractive for both private wealth and institutional investors. #PrivateMarkets #EvergreenFunds #InvestmentTrends #PerpetualCapital #WealthManagement

In the world of investing, it’s easy to get caught up in the excitement of the latest trends and narratives, especially when they’re backed by compelling stories like those of Cathie Wood’s ARK Investment Management LLC ETFs. 🌟 However, chasing the hype can come at a significant cost. 💸 The rise and fall of ARK ETFs highlights the dangers of trend investing, particularly when cognitive biases such as FOMO (Fear of Missing Out) lead investors to make impulsive decisions. 🚨 Explore the highs and lows of Cathie Wood’s ARK ETFs, uncovering the risks of trend investing and the impact of investor biases. 👇 https://lnkd.in/gaj4ZAhw

Private markets aren’t an old boys’ club anymore. Here’s why the doors are swinging open for every investment class👇 In the last several years, major VCs and private equity firms have gobbled up other managers. Their goal: To concentrate more and more wealth in their one-stop shops. The problem is that what they’ve been offering for the past decade has not worked for 60-70% of the world’s wealth. Family offices, wealth managers, banks, and individual investors were all left out. These groups want transparent, low-cost solutions that provide direct access to private markets. The good news is that those solutions are here and growing. Products like our own Top 20 Unicorn portfolio give investors of all types immediate access to private markets. And it is built to do so with above-average liquidity and no performance fees. The key is the “VC direct secondary” transaction: Where existing investors sell specific company shares to other investors (and not to confuse the more mainstream way of fund secondaries where investors sell parts or entire portfolios via LP fund share transfers). Secondaries are complex but powerful. With the help of new technology, data, and institutional solid processes, we use them to create a portfolio that functions essentially the same as an ETF: We have built and scaled exposure to the world’s best, most established, and most valuable private tech companies with solid growth prospects. But unlike an active strategy, we do not try to foresee the future better than anyone else by utilizing some “magic superpower.” It is a much easier concept. It is an entire private market disruption based on the “superpower” of VC direct secondaries. It is a passive strategy that provides investors with easy access and exposure to all the Top 20 unicorns in one portfolio at low cost and improved liquidity. Of course, disrupting an entire trillion-dollar industry is slow work. We estimate we’re still about 2-3 years away from a major tipping point. That feels like a long time now — but in investing terms, it’s still right around the corner. Do you agree? Let us know in the comments👇 PS: Don’t forget to sign up for Stableton’s Navigator newsletter: https://lnkd.in/ezPbVQae

From HBO shows to news headlines, private finance tends to dominate our popular understanding of the business world. But do these industries add value, economically or otherwise? Our new research reveals that, despite posting profitable returns in the wake of COVID, the leveraged-buyout private equity and venture capital industries have since faltered, providing returns comparable to public markets. The latest data is part of our Coin-Flip Capitalism report, which helps policymakers and the public better understand how the hedge fund, private equity, and venture capital industries function, what social and economic value they create or destroy, and how policy should respond. You can read the update here: https://lnkd.in/ecitYHSw

Learn about the pitfalls of passive investing and why Arnott's contrarian approach and smart-beta framework offer valuable insights for investors seeking opportunities beyond market-weighted indexes.

The #QuantitativeInvesting Revolution in #PrivateMarkets is well underway. In a way, Blackrock’s acquisition of Preqin vindicated my 6-year journey to combine public and private market investing. This move underscores the path toward greater adoption of private investments within diversified portfolios, driven by quantitative technology integrating both markets. LPs appreciate the value of private markets—access to niche areas, potential for higher alpha, and lower observed volatility. Yet, they also face challenges when allocations to private assets become material — high IRRs don't lead to higher wealth, inefficient capital allocation, and over-diversification diluting alpha. Quantitative technology is key to overcoming these hurdles, delivering knowledge, solutions, and alpha. 1. Knowledge: Technology & Data lay the groundwork for solutions and alpha generation. Tools like Venn by Two Sigma standardize metrics for evaluating public and private investments side by side. 2. Solutions: Using data to address LPs’ challenges—factor exposures, macro sensitivity, cash flow, and total wealth—enabling superior portfolio construction combining public and private strategies. 3. Alpha: Identifying superior alpha opportunities by leveraging statistical, Machine Learning, and LLM tools to distinguish alpha from beta, enhancing both fund and deal-level performance. Alpha Fusion is excited to be at the forefront of this revolution. As private investments extend into #retirement and #wealthmanagement, quantitative portfolio solutions will be essential for delivering superior outcomes to millions of individuals. It's an exciting time for LPs and a profitable opportunity for forward-thinking asset managers. Read more in my latest article on Substack. https://lnkd.in/eJqW9XNY #assetallocation #portfolioconstruction #alternativeinvesting #privateequity #privatecredit

While no one was looking, John Bogle created the Index Fund, revolutionizing the investment landscape with accessible and affordable portfolio diversification. Today, the Index Fund is one of the world's most astute investment tools. Here's John Bogle's story: QUICK BACKSTORY: John Bogle grew up in New Jersey. - Experienced financial hardship during the Great Depression. - Attended Princeton University on a scholarship. THE ODDS: To say John Bogle had a silver spoon handed to him would be far off the mark. The odds of success for a finance pioneer in such challenging economic times were markedly low. And only a handful make significant strides in reshaping the financial ecosystem. THE GOAL: But John Bogle had his sights set on democratizing investment. And for several decades, he was relentless about financial literacy, transparent pricing, and accessible investing. THE OBSTACLE: Unfortunately, success turned out to be quite elusive initially. - Faced skepticism and pushback from Wall Street. - Fought regulatory battles. - Experienced a heart attack in the mid-’70s. And by 1975, he faced the possibility of his vision being derailed. THE BREAKTHROUGH: Until one day, the launch of the First Index Investment Trust (now Vanguard 500 Index Fund) marked a significant shift. As the story goes, the Index Fund's introduction started to change the narrative around mutual fund investing. And the rest is history. THE ACHIEVEMENT: Between 1975 and 2019, John Bogle went on to: - Transform Vanguard into a trillion-dollar asset management company. - Pen several top-selling books about investing. - Be named by TIME as one of the world's 100 most powerful and influential people. - Most importantly, he democratized investing for the average individual. THE LESSON: I love John Bogle's story because it represents the power of tenacity, vision, and dedication, compounded over time. It reminds us of the power of financial literacy, transparent pricing, and accessible investing when we are planning not just for retirement but for a stable and financially secure future. Because when we focus on the right things, where we’re headed is certain. We just need the future to catch up. #Financialsuccess #Financialwellbeing

Is active investing getting back its mojo? 💸 In a time when USD risk-free rates offer a solid 5% yield, active fund managers have pulled off something quite impressive. They've managed to attract significant inflows into active bond funds. 💰 Think about it - in an environment where you can get a 5% return with little risk, it's a big deal to convince investors to opt for a more actively managed strategy. Yet, active bond fund managers have done just that, and here's how. First, they lured investors with the promise of 5% (and higher) yields, attracting significant attention. 🤑 This strategy has been quite effective, with about $90 billion flowing into active bond funds in the first quarter alone. That's the most for any three months since mid-2021. 🚀 But it's not just about the numbers. Active managers have been marketing their expertise heavily to navigate the tricky bond market. With the timing and number of rate cuts constantly changing and bond prices and credit quality distorted, active management is trying to show its value. 👍 And it seems like investors are taking note. Despite the attractive yields on cash, there's growing interest in high-performing active funds. As the news of rising interest in active investing comes out, the active vs passive debate is gaining traction again. 📣 Which investment approach is better? Which one would you favour in the current environment? Drop a comment below! 👇 PS. If you made it this far, ♻️ share with your network and 🔔 subscribe to my profile.