Funds Congress Highlights
Article | The Global Economy in 2023 and Beyond

As the fund industry continues its search for profitable growth opportunities in an increasingly challenging market context, a panel of fund managers shared their opinions on current and future trends for alternatives.
- The sustained buoyancy of the secondaries market continues to impress, with transaction volumes doubling to US$100 billion+ from the levels seen five years ago—proof, if it were ever needed, that the sense of stigma once associated with the selling of secondaries stakes has faded at last. With a wide range of trends and indicators pointing upwards – from greater market efficiency to growth in the number of specialist buyers – the market is now widely viewed in a positive light as a valuable source of liquidity. Secondaries, the panel agreed, are here to stay.
- The vaunted “retailisation” of private capital provided fertile grounds for discussion. Some democratisation of private capital seems inevitable, panellists agreed, with strong demand-side interest driven by some retail investors. Banks, too, may welcome the trend as they spot opportunity to differentiate themselves through services aimed at retail customers. Nevertheless, the complexity – and cost – involved in developing entire suites of new retail products suggest that the provider group equipped to take on the challenge may remain small.
- Fears that greater inroads by retail investors could decimate fee structures in private markets are unfounded. In contrast to the ETF markets, panellists felt, a different dynamic is at play with alternatives. New entrants will more likely take the form of high-net worth individuals and private bank clients—sophisticated, well-advised investors. Simpler models might spawn simpler fee structures but a distribution channel will remain and it will need to be remunerated.
- The growth of non-bank lending looks set to continue as banks vacate the lending space and as private funds move to fill the gap. It’s no surprise, say panellists, as market participants on both sides of the equation like much of what they see: expedited turnaround times, opportunities to add scale, significantly lower volatility than in the syndicated loan market—all in addition to the advantage of knowing your counterparty. And with non-bank lending tending to take place towards the top of the capital structure, mega-managers and large-cap borrowers will be increasingly drawn to the private credit space.
- Tax considerations are best addressed early, concludes Dechert and Mergermarket’s 2023 Global Private Equity Outlook report, which highlights the beneficial role that tax-efficient fund structures can play in the alternative space—if properly and promptly addressed.
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