Pedro Guazo, Representative of the Secretary-General for the investment of the UNJSPF assets provided an overview of the factors influencing private market allocations from some institutional investors at the Markets Group 12th Private Equity Forum. This forum convened leading limited partners (LPs) allocating resources to private markets in the United States.
“With the fall in valuations in the public equity market in 2022, many asset allocators were overweighted in private markets. Some were even selling, but a lot of them would not be able to allocate more capital. In addition, with higher interest rates, the competition for resources was more complex. There was a bigger return putting money on high yield or other fixed income portfolios from a risk related standpoint,” he stated.
“With public markets recovering in 2023 and 2024, there will be space in the upside for private equity. As interest rates go down in the next two to three years, we will see a change in the strategic asset allocations towards more private markets,” Mr. Guazo added. Other panelists noted that the lack of distribution puts asset allocators in the same space.
On data, sourcing new deals, ESG and the role of AI, panelists highlighted the importance of relationship building and learning from other asset allocators that have a competitive advantage over newcomers.
“At UNJSPF, we are approaching key data partners to see what they are doing with AI that could be helpful for our staff to do better analysis, research and comparisons,” said Mr. Guazo.
The Limited Partner Roundtable concluded with a reflection on the importance of establishing good relationships across the finance ecosystem, the importance of evaluating new tools that could be used in-house by investors and the role that private equity might play in healthcare.
The roundtable was moderated by Harris Scher, Vice President, Business Segment Manager, Private Equity, Dun & Bradstreet. Panelists included: Pedro Guazo, Representative of the UN Secretary-General for Investments, United Nations Joint Staff Pension Fund; Kirk Sims, CFA, Managing Director, Teachers Retirement System of Texas; Maurice Gordon, Head of Alternative Investments, Guardian Life Insurance; and Deepika Sharma, Director, Portfolio Construction and Asset Allocation, BlackRock.
