Alternative asset manager equities face sentiment headwinds
The guest argued that publicly traded alternative asset managers (GPs) are becoming an interesting contrarian watch as negative sentiment peaks over redemption caps.
The argument
As semi-liquid private credit funds face rising redemption requests and enforce 5% quarterly caps, their asset bases are expected to shrink, leading to lower fee revenues for the managers. However, the guest suggested that the resulting negative sentiment may create an attractive entry point for the equity of these GPs as the market overreacts to the capping of redemptions.
The thesis, stress-tested
✓ What validates it
- ✓Q2 and Q3 fundraising data (reported around August/September) showing resilient or recovering inflows into semi-liquid vehicles
- ✓Stabilization or reduction in quarterly redemption requests
▸ Risks discussed
- ▸Fee revenue is highly likely to decline as asset bases shrink from capital outflows
- ▸Advisors may halt new allocations to capped funds, compounding the slowdown in inflows
Hear it yourself
"However, what's been on the news recently is a lot of private credit specifically private credit, semi liquid funds have received a lot of redemption requests. So on the one hand, we have a lot of new money coming in."
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