A public exposure to private markets
As public equities enter a period of earnings weakness driven by sluggish economic growth and margin pressures, investors are left looking for alternatives. One interesting universe has been private equity (PE). Despite economic uncertainties, the world’s largest PE firms have been raising ever larger funds to invest globally. Interestingly, the public listings of these PE firms have outperformed the MSCI World index by over 30 percentage points this year. One reason for this has been falling yields. As major central banks return to easing through rate cuts and possibly QE, PE firms should benefit from lower financing costs for their leveraged buyout deals.
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