What Investment Strategies Will EMEA-Based Limited Partners Leverage in 2021? [Video]
Watch a roundtable discussion from the inaugural SS&C Intralinks Alternative Investments Global Virtual Summit.
22 January 2021
In a COVID-19 world economy, with fixed income continuing to underperform and equity markets maintaining volatility, what does the future hold for alternative investments in 2021? During the SS&C Intralinks Alternative Investments Global Virtual Summit, I moderated a roundtable of alternative investment stalwarts based in EMEA. The goal was to get valuable insight into the direction of alternative investments from EMEA-based limited partners (LPs) over the next 12 months.
I was joined by Gerald Moser, managing director, Barclays Private Bank; Bernard De Backer, Partner at StepStone; Garvan McCarthy, chief investment officer alternatives for EMEA and APAC at Mercer and Tom Lileng, managing director with General Oriental Investments (SFO).
Looking back and ahead
The conversation began with a brief recap of how the pandemic affected their funds in 2020. After a year that opened with U.S. Treasuries showing promise, after the pandemic began, distressed debt and restructuring opportunities became more advantageous for the private market. “Alternatives weathered the storm pretty well,” said Garvan. Hedge funds seemed to fare well too, helping to defend on volatility.
The consensus was that due diligence was significantly impacted by the sudden shift to work-from-home. Face-to-face meetings and onsite inspections, which are especially vital for emerging managers who are looking to nurture relationships with potential investors, were all but impossible due to government-enacted lockdowns and travel bans implemented to prevent the spread of coronavirus.
Optimism and resilience
But what we really wanted to know about 2021 came to light later in the discussion. With alternative investments as a key component of this group’s portfolios, would they increase allocations this year?
A few of the panelists believe LPs want to remain active in the market. The panel also forecasted the sectors where they expect to see continued growth, some beyond 2021. A few industries received positive mentions (e.g., Healthcare) with others tagged as struggling.
“We’ll see more distressed debt and restructuring strategies into 2021,” said Bernard. “But two-thirds of our clients are maintaining allocations.”
“The private market may be the area where investors want to stay longer in 2021,” added Tom, which would help avoid competition from banks. Overall, Gerald sees alternative investments as a way to diversify portfolios.
Data’s role at the forefront
So what will be one of the most important factors in the LP-GP relationship going forward? Data transparency and accessibility, all agreed, were vital.
Processes are becoming lengthier and more data-driven, and the amount of data required by LPs from a GP will continue to increase.
“Transparency really is essential so it can be used within internal processes at various in-house teams or consultancy firms,” said Garvan. “That’s somewhat of a no-brainer — that’s not rocket science.”
Added Bernard: “Prepare well. Have your data room well-stocked and well-vetted. That will put you in good stead if you’d like to have discussions with LPs.”
My thanks to Gerald, Bernard, Garvan and Tom for engaging in a fruitful, constructive and open exchange. I invite you to watch the full discussion below.
Daphné de Vogüé
Daphné joined SS&C Intralinks two years ago. Currently, she supports Intralinks’ large private equity and hedge fund clients with their fundraising processes and ongoing investor communication across EMEA.