Last week I was in New York for the annual Institutional Investor “Americas Government Funds Roundtable”. I thought it was really solid. Topics ranged from rethinking asset allocation in a slow growth environment to reviewing the best investment opportunities in Latin America. I was quite glad I made the trip.
Anyway, in keeping with the off-the-record format, I thought I’d share a couple of generic and anonymized take-aways. Here you go:
- Illiquid Assets: There was a poll at one point canvassing the fifty or so funds in the audience about where they’re moving their assets in order to try to meet lofty return objectives in the current “low return environment”. The results were interesting: Illiquid assets topped the charts with emerging markets coming second.
- Being Creative: Funds are trying out increasingly creative strategies (...frighteningly so given the internal, organizational resource constraints at some of the funds...) to meet their return objectives. This includes certain niche strategies and geographies. I have to be honest here, I’m not sure how I feel about a some funds spending time and effort vetting and then monitoring a niche (and small) mandate when they’ve got much bigger fish to fry; this could be a recipe for disaster...
- Succeeding in LATAM: There was widespread agreement among panelists and attendees that successful LATAM investors have to have considerable local knowledge, contacts and access (to politicians and deals). It was also interesting to learn that some of the best LATAM private equity deals come to investors in much earlier stages of conceptualization than is typical of PE deals in the West. This means making successful PE investments requires an operational capability that most traditional PE shops might not have.
- The Value of Benchmarks: In talking about the value of benchmarks, one of the attendees unleashed a real beaut on the crowd: “I don’t think anybody should care if I’m the fastest lemming... I’m still just a lemming.” Ain’t that the truth!
Anyway, no doubt there were more themes from the conference, but those are the few that stood out for me.
