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Like many of you reading this, I’ve just returned from the annual hedge fund week – or should that be weeks – in Miami. Not only was it nice to get a bit of sun, but it was also great to be among a (very large) group of people with such a positive mindset.
We co-sponsored Fundviews Capital’s second iteration of its ‘Alternative Investments Cocktails and Bites’ networking event on Tuesday January 30th, with our friends at Akram Assurance, Advisory & Tax Firm, Divergent Capital Asset Management, Gryphon Investors, Housing US, Riveles Wahab, Shadmoor, Thompson Creek Wealth Advisors, and WealthBlock.
Two things struck me, both from the conversations I had at our event, and those that I had at some of the other events I went to.
First was relief that we had entered a new year. 2023 was hardly a banner year for the alternative investment industry, after all. Capital raising was off, across most of the main categories of the space, and deal flow in private markets pulled back. And that followed on the back of a difficult 2022 as well.
Second was optimism. That’s probably not surprising because most finance types have a bullish mindset. But it’s different this year. Last year, I felt that most folks had ‘speculative optimism’ – more crossing fingers as opposed to having something specific to point to in order to support that view.
But this year, many people I spoke with seemed to think that interest rates have plateaued, which is, of course, good news for a large swath of our industry. Some even think that the end of this year might see the Fed cut rates, which would be the first time since the spring of 2020.
Others point to pent-up demand, particularly in the private markets. The surge in public equities in recent months – the S&P 500 recently hit an all-time high – means that many investment portfolios will be back to something close to targets, giving more wiggle room for institutions to deploy capital back into private equity, for example. Add to that the existing dry powder in the industry, and you suddenly see good reason for 2024 delivering a significant jump in deal flow.
As I’ve said many times, I’m an eternal optimist, but I feel better when I can point to data and/or something substantive to support my gut feel. Like many of my clients, colleagues, and friends, I feel that we have that this year.
Fingers crossed!
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Anthony D. Mascia is Managing Partner at EFSI. Connect with him on LinkedIn here.
EFSI is an independently owned, SOC-1 compliant, full-service fund administration firm. We provide accounting, reporting, administrative, and capital introduction services to a wide range of alternative investment funds including hedge funds, funds of funds, private equity funds, real estate funds, venture capital funds, and family offices. The center of EFSI’s service incorporates resilient technology and accomplished staff, providing clients a tailor-made service with exhaustive transparency. Give us a call today or reach out to our support team online. We look forward to hearing from you soon.