David Vatchev

ESTR Futures Update: A sharp uptick in ICE's ESTR as it marches towards the 500k mark. Eurex crosses 200k. With just under 65k on CME that makes almost 765k O.I cumulatively. Euribor open interest remains a steady ~4m Drop me a message if you're curious on where we are seeing the flows etc. #markets #futures #cme #eurex #ice #trading

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FX LEHMAN MANUAL. Another chance to get this. It doesn't matter how experienced you are as a trader I really recommend you read this. Just for the Forwards calculation alone (which changed my game) I recommend all traders go through the whole manual. Back pre GFC some say Lehman was THE other Alpha bank (GS being the rival) I never worked there BUT I have mentored ex-traders who did. They are the finest traders I have ever met. Take outs for me: 1. The FWDS formula to work out a quick and dirty spot price based on rates today. 2. Crosses - say no more but if you want to know how I look at crosses DM me. 3. Swaps and Options - a nice brief outline of these. Please LIKE and make a comment for a PDF Copy. You can also join our institutional insights list The Adamis Gold to never miss out on all the future Manuals and interviews with FX legends. Click in the comments as the link is there too.

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ESTR Futures and Liquidity... Two different exchanges, two different approaches. A question I'm fielding a lot is, where is the most liquidity? My attached grid shows outrights and the basis side by side for each expiry. ICE, the leaders by Open Interest at first glance appears to have the liquidity. What I find interesting is that each exchange has a different approach to their stacks. ICE has adopted the pro-rato model. This encourages you to show more size to do more trades. Eurex is using FIFO, first in, first out. A queue system that means should you want to trade you are rewarded for keeping your interest in the book as you make your way down the line. The question is which is the better way? #markets #futures #option #estr #ice #eurex

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Should developers measure #ROCE rather than #ROE? In short, yes. ROCE, or Return on Capital Employed, shows how effectively a company uses its capital— debt and equity—to generate profits. Unlike metrics such as Return on Equity (ROE), which only considers equity, or Return on Assets (#ROA), which only focuses on assets, ROCE is calculated by considering both debt and equity, providing a balanced and comprehensive view into profitability and capital efficiency. At a time when every penny counts, ROCE is a powerful tool for assessing a site's efficiency and profitability, ensuring that every penny invested is working hard. A higher ROCE value usually implies better investment quality, as it suggests that a company can generate a higher return on each unit of capital employed. As more #developers (and #lenders) move towards using ROCE to measure the viability of their sites and make informed investment decisions, Brickflow now shows ROCE in the search results against every #DevelopmentFinance and #RefurbishmentBridging search.

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When there are complaints of regulatory arbitrage, it usually means that there are some needs unmet by incumbent players. With the private car hire industry, for example. Or platform gig work where platforms don’t pay CPF like employers do (until some recent changes). This is not to say that it is right, in this case, for unlicensed persons to give financial advice - actual recommendations on what to buy and what to sell. (That’s a simple way of understanding what constitutes advice.) Money decisions have a long tail. They affect people profoundly and some of the repercussions will not be experienced for years to come. When someone acts on your advice, guidance or information, they are entrusting their hard-earned assets as well as the future of their own life, retirement and the well-being of their children to you. Financial advice is a profession. A professional is one who needs to have sufficient training, and knows more than the one engaging their service. The asymmetry imposes a duty on the professional only. The recipient need not know anything for the professional to be obliged to act with care and skill. Here are my thoughts for three different groups: 1. For finfluencers - Please go beyond thinking about whether you fall afoul of regulations, to the impact on people’s lives. If you are not qualified to give advice, by professional training, competence and intention, don’t. Be a platform, but don’t do what you aren’t qualified to do. 2. For fellow advisers - Is there some unmet need, causing finfluencers who aren’t licensed to gain more traction than licensed advisers? Is it really only to do with tech savvy and the use of social media? Are we trusted - both competent and trustworthy enough, just like all othe professionals? As the trust equation goes, it is credibility, reliability and intimacy, discounted by self-interest. Have we handled the conflict of interest well and do we hold ourselves to the fiduciary standard of acting in the clients’ best interest always, versus just fulfilling preferences, no matter what the impact on our income? 3. For the public - It would be advisable to be more discerning in terms of the intentions and motives of people who are “advising” us - be they finfluencers or advisers - and look beyond the surface. Please consider not depending only on someone presenting financial products before you take action. The fact is that many financial products are still sold, not bought, despite the proliferation of technology and online DIY options. Ultimately, financial advice is not a replacement for #financial literacy. Build up your financial knowledge and capability, and you’ll have better instincts about who to trust, what to do, and how to do it.

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An excellent take from The FT on NFP yearly revisions post the ZH story. This obviously caused front running sellers of USD. I made it free to the first 10 people as a FREE gift. BAML nicely added: Are these figures final? No. "This is a preliminary estimate of the annual benchmark revision. The actual revision might be different, based on revisions to the QCEW data. Last year’s preliminary estimate was -306k, but the final revision was just -266k." What does this mean for the unemployment rate? Nothing. "The unemployment rate is calculated from the household survey. The QCEW impacts the establishment survey. What are the broader labor market implications? Even after these large downward revisions, the labor market looks to have been on solid footing last year and in 1Q 2024. That is consistent with the resilience in consumer spending." By contrast, employment growth in the household survey looks too weak relative to the rest of the macro data (54k on average from April 2023 to March 2024). That said, the revisions do help close the gap between the two surveys. My 3 key considerations: 1. USD sold on the ZH story rumour and bought the "fact" but we need the doves to come out AKA Dec 2023 for EURUSD to crack 1.1276 which is the 50% fib on the DAILY CHART. 2. Forget the yearly revisions and focus on lead indicators like LMCI (Kansas City FED) which looks smelly to say the least. NAIRU getting hit on my radar too. 3. Labor Costs nose diving which should drag Core PCE lower (dare I say it below 2% Happy Friday!

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BlackRock: "We believe that Bitcoin, via its nature as a global, decentralised, fixed-supply, non-sovereign asset, has risk and return drivers that are distinct from traditional asset classes and that are fundamentally uncorrelated on any long-term basis". This week’s BlackRock's report "Bitcoin: A Unique Diversifier" brings to investors’ attention the novel properties of the world's leading digital asset. Co-authored by Samara Cohen, Robert Mitchnick, and Russ Brownback (with contributions from Emily Fredrix Goodman, Wendy Hu, Ashley Saidler, and Derek V. DiMasi), it outlines the power of Bitcoin exposure for institutional investors across a broad range of scenarios. So, the world's largest asset manager just published a paper expressing a constructive and well-argued view on Bitcoin. What are the 5 key points that stand out? 1) Bitcoin's decentralised nature and economic design (i.e. finite supply and mathematically predictable issuance) have "produced major breakthroughs to multiple centuries-old problems that other forms of money have struggled with." 2) Bitcoin is truly uncorrelated, reflecting "little fundamental exposure to other macro variables", as "Bitcoin outperformed all major asset classes in 7 out of the last 10 years, leading it to an extraordinary return in excess of 100% annualised over the last decade. This performance was achieved despite Bitcoin's severe losses in other 3 of those 10 years." 3) Bitcoin can be, as Larry Fink said, a "flight to safety" asset, and has greatly outperformed S&P500 and gold in the wake of major geopolitical events, boasting positive (10%+) performance 60 days after major selloff events in 4 out of 5 (!) cases, when both other assets combined only featured one 10%+ return instance. 4) Bitcoin provides a globally-accessible hedge against currency debasement, particularly as "the state of US federal deficits and debt has increased the appeal of potential alternative reserve assets as a potential hedge against possible future events affecting USD." 5) Bitcoin is still a "risky" asset due to its status as an emerging technology early in the adoption journey BUT doesn't fit neatly into established theories of "risk-on" and "risk-off" assets. BlackRock believes "Bitcoin held at modest allocations can have a diversifying effect on portfolios." (In the way of specific numbers, Nickel’s own research revealed that a 5% Bitcoin allocation to a traditional 60/40 portfolio boosted annualised portfolio return by nearly 500bps per annum from 9.1% to 14.0%, whilst impacting max drawdown by a mere 0.8%, from 21.5% to 22.3% - see comments below) The report concludes that in the face of global uncertainty, "Bitcoin may be seen as an increasingly unique diversifier against some of these fiscal, monetary and geopolitical risk factors investors may face elsewhere in their portfolios". #digitalassets #evolution

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I get asked quite a lot what it takes to become a good trader. RISK over RATES and RATES over MACRO is my default answer. I'm not the oracle but it has worked for me for the last 15 years in Futures and then in Spot FX. It's also important to know when the market is "right" or "wrong" and It took me at least 5 years to gain enough confidence to call it. Traders like to be just ahead of the curve. Not too much so we get run over - but just enough to get value. Let's take Stagflation in the US The mere mention of it to some is unthinkable. This is GOOD because it is not priced in. I am looking at PPI, Prices Paid, Unit Costs and of course The UOM 1 Year. I tend not to look a CPI Swaps or B/E but it's a personal thing. It's one thing getting in front of a narrative curve its quite another thing as to know how to trade it. This puts the Fed in a bind with its dual mandate. CUT and jobs lift with the danger of higher PCE or HOLD for longer capping inflation but running the danger of higher UE and capping growth (IMO lower GDP is the darling child to help Stagflation bear fruits) SOLUTION: 1. Look at the reaction to USD on any sticky inflation component but realise the move may not last. Fading is my skill out of necessity but more on that later. I hope this finds you well. I have left my USDCAD chart which has been a faders paradise for the whole of Q1 If you would like to know more about my mapping with confluence please DM me for a chat. You can also book me through my Calendly link in the comments and we can discuss USDCAD and what my Q2 thoughts are.

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Avoid relying solely on fund managers to make investment decisions, as they may have limitations and conflicts of interest. Key Steps: Step 1: Avoid Geographic Limitations Do not restrict the investment portfolio to a specific geography (e.g., only UK stocks or Japanese stocks). Geographic limitations limit the gene pool of stocks to choose from and may result in poor performance. Instead, consider investing in a globally diversified portfolio to access a wider range of investment opportunities. Step 2: Overcome Style Limitations Do not limit the investment portfolio to a specific investment style (e.g., growth stocks only). Style limitations ignore important factors such as valuation, cash flow, and momentum, which can impact future stock price movements. Instead, adopt a flexible investment approach that considers multiple factors and investment styles. Step 3: Avoid Theme Limitations Avoid investing solely based on popular themes or buzzwords (e.g., crypto, AI, cyber). Theme limitations restrict the investment pool to a narrow set of companies and may not lead to the best returns. Instead, focus on identifying the best companies with strong fundamentals and growth potential, regardless of specific themes. Step 4: Overcome Capital Constraints Be aware that fund managers often have large amounts of capital to manage, which limits their ability to invest in individual companies. Large capital allocations require spreading investments across many companies, resulting in minimal impact on individual stock performance. Instead, consider investing in a portfolio with a reasonable amount of capital allocated to each stock to ensure meaningful returns. Step 5: Be Prepared for Market Downturns Recognize that fund managers may have a conflict of interest during market downturns and may not advise moving to cash. Market downturns can be an opportunity to hold cash and avoid losses. Consider the ability to sidestep the market and hold cash during periods of downward momentum. Stay informed about market conditions - see www.alpeshpatel.com/links

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𝗧𝗶𝗺𝗲 𝘁𝗼 𝗥𝗲𝘁𝗵𝗶𝗻𝗸 𝗕𝗲𝗻𝗰𝗵𝗺𝗮𝗿𝗸𝗶𝗻𝗴 𝗶𝗻 𝗔𝗰𝘁𝗶𝘃𝗲 𝗙𝘂𝗻𝗱 𝗠𝗮𝗻𝗮𝗴𝗲𝗺𝗲𝗻𝘁? 🔍 Is the concept of benchmarking for active funds due for a serious revamp? In an era where passive funds have become highly investible thanks to the surge in ETFs, does it still make sense for active managers to be benchmarked against their largest competitors? This practice seems counterintuitive at best. Historically, benchmarks served more of a theoretical purpose, but as passive vehicles become more accessible, the rationale for this kind of benchmarking grows increasingly thin, in my view. After all, what is a benchmark anyway? They are systematically constructed, more than often comprising an arbitrary number of stocks that sound pleasing to the ear (S&P 500, FTSE 100, Nikkei 225 etc), weighted usually according to the size of the company. Why would an active strategy want to be benchmarked to any of these indices?? Yet it’s quite clear from our analysis that active managers are under pressure to keep within certain benchmark tolerances – in most cases it is proscribed by the end investor. Our latest research at Copley highlights a striking correlation between the weight of a company in the benchmark and the percentage of active funds who own it (see charts below). suggesting that the very act of benchmarking is shaping investment decisions more than we realize. I can only believe this hampers the ability of an active manager to deliver true outperformance. 𝗣𝗼𝘁𝗲𝗻𝘁𝗶𝗮𝗹 𝗦𝗼𝗹𝘂𝘁𝗶𝗼𝗻𝘀 𝘁𝗼 𝗖𝗼𝗻𝘀𝗶𝗱𝗲𝗿: 🌐 𝗥𝗲𝗺𝗼𝘃𝗲 𝗦𝗽𝗲𝗰𝗶𝗳𝗶𝗰 𝗜𝗻𝗱𝗲𝘅 𝗕𝗲𝗻𝗰𝗵𝗺𝗮𝗿𝗸𝘀: Could a regime where active managers are only required to adhere to selected country investments offer the needed flexibility? Isn't it enough for a US active fund to simply invest in US companies? Why include the S&P 500 at all? 📊 𝗣𝗲𝗿𝗳𝗼𝗿𝗺𝗮𝗻𝗰𝗲 𝗠𝗲𝗮𝘀𝘂𝗿𝗲𝗺𝗲𝗻𝘁: What about moving away from a single-figure benchmark to evaluating performance over a range, such as a breakdown of active fund performance by quartile over different periods? These changes could provide a more nuanced understanding of a fund’s success and stand as a more relevant measure of an active manager’s skill. It offers a standard for performance evaluation but also gives the active manager true investment freedom. In short, active managers should be benchmarked to themselves, not an index benchmark. I’d love to hear your views on this, particularly from active managers and fund selectors. I am not anti-passive, I just don’t like the role that passive plays in active management, as it doesn't seem to me to be a level playing field. And when you look at fund flows, particularly in the US, active management is most definitely coming off second best, and I think that's a shame. #ActiveManagement #InvestmentStrategy #FinancialMarkets #FundManagement #Benchmarking #CopleyFundResearch #ETFs

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HEDGE FUND POSITIONING: Lumida's 13F Tracker Here it is: This tracker covers several dozen leading HFs and tracks (i) top positions, (ii) new positions, and (iii) closed/reduced positions. The objectives here are Idea Generation and spot crowding. At 12 PM ET, I will cover: 1) General positioning and shifts 2) Hedge fund-specific moves (e.g., Druckenmiller, Michael Burry, @altcap , David Einhorn, etc.) 3) Company-specific trends and themes (e.g., China, $NVDA, $AMZN, etc.). Did anyone buy $PLTR, $INTC, or $SOFI ;) 4) The Front Run. We will identify managers with a large position AND selling their position. Bill Ackman selling $CMG is one example, and Warren Buffett selling $AAPL is another. Join below- https://lnkd.in/g-tqiSwH

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🔔 A NEW research White Paper has just been released and it is relevant to all equity investors. Quant Insight collaborated with Axioma Inc. by SimCorp to study a topic that is becoming increasingly important across equity investing. Background: Fundamental equity style factor models are now used extensively by risk and portfolio managers to better understand their underlying sources of risk and return. Any return not explained by style, market, sector or geography tends to be classed as stock specific idiosyncratic risk. BUT in recent years we have seen a major increase in macro volatility. This has had a major impact on portfolio returns especially at major turning points. Typical approaches have struggled to capture the impact of macro which is why Quant Insight developed a new Macro Factor Equity Risk Model. 👉 The White paper shows that fundamental style factors are not immune to macro factors. Far from it at times. I have added a chart from the White Paper as an example. 📉 The chart shows the Total Return of the Quality Factor and breaks this down into that portion that comes from macro and also the residual (non-macro). 👉 It is interesting that macro dominates in times of higher overall volatility. Indeed, if you want to understand your portfolio volatility, it is now important to understand the macro drivers of that. 👉 The Paper also discusses how a macro factor model for equities can be used as a powerful COMPLEMENT to a style factor lens. Together, both lenses in combination provide a much more complete picture of risk and return. If you now add into the mix the prospect for higher volatility in inflation, rates, economic growth and the US Dollar, not to mention geopolitical uncertainty, it is east to see why investors are now adding macro factor solutions to their investment and risk management process. LINK to the paper is in the comments section 👇 #riskmanagement #factorinvesting

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I spoke to a prospect yesterday. They had sell-side experience at GS, covering the major hedge funds. They found it difficult to make the jump to the buy-side. This is a recurring issue for current and ex-bank sales traders wanting to make the jump. So, I thought I would try and help. I say this because I have helped sell-side rates and FX traders. I moved them to futures desks taking directional risk. Here are four considerations that may help: 1. You may be very experienced in strategy servicing the leading hedge funds but they may not want to take a risk on you. It's a completely different job that requires a lot more. 2. The relationship changes completely when you leave. They may open the door to have a friendly chat, but offering you anything more will be difficult. 3. Hedge funds tend to ask two things of potential new PMs. Is it scalable and is it repeatable? If you don't know the answer to either, the chances of getting another meeting will be scant. 4. Why not reach out to those contacts after you have a 3-month track record in FX, Bonds or Equities? All this will give you is a good talking point in the meeting. It won't pave the way to get into a pod, but it is a start. You can DM me for a chat because our 3-month mentoring programme will enable you to do this. In the meantime, try to learn how to manage risk, execute, trade macro, and lift your Sharpe up. In two weeks, I will solve one of these problems by teaching you how to become a macro expert. It is completely free and you can register below in the comments. 

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Perfect Illustration Re How to Use a FX Fair-Value Model The past few trading days might just be the perfect window to showcase the usefulness of any FX fair-value model (e.g. REER, PPP). We will use our very-own BI BEER model as an example here. If you are new to our BI BEER model, this is essentially a simple OLS model based on four macro independent variables. Again, one shouldn't initiate a directional bias for any FX pair purely based on under/overvaluation. Rather, the extent of under/overvaluation should be used as a reference re how far the valuation adjustment could run -- should fundamental/market development favor a narrowing of such under/overvaluation. In other words, it could suggest possible levels as to where one should be wary about the exhaustion of the valuation-adjustment trend. Interestingly, the sharp yen move has brought USD/JPY (and pulled other USD/Asia pairs along) toward and even beyond their respective fair values, which then saw the pair rebounded and stabilized somewhat at the moment. For example, our BEER model has suggested a fair value for USD/JPY at 142.74 and USD/CNY at 7.1585, respectively. --- For your convenience, the BI BEER times series for G10 and Asian currencies can be found on our FX dashboard: {BI CURRG 1115 |1115-2-Q-Data|Q12||USD<GO>} Alternatively, the model output are tickerized so you can just type e.g. {JPY BEER Curncy} (may have to change time frequency to quarterly for the data to show up). #bloombergintelligence #fxtrading #asia #yen #us #federalreserve How USD/JPY Breached and Rebounded Around Our Modeled Fair Value (Source: Bloomberg Intelligence)

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This is crazy Since last October hedge funds have pumped $24 BILLION into the #Turkish #Lira and there seems to be no signs of stopping We are witnessing the largest 'carry trade' position by hedge funds in the past 5 years Why? Turkey's interest rates have soared to 50% from 8.5% since last June after the country went through an economic overhaul Funds are performing a 'carry trade' in which they are borrowing U.S. #dollars and investing in Turkish lira In addition to betting on the currency, foreign investors have scooped up around $12.5B in lira government #bonds since the economic overhaul last June Foreign #investors now hold an astonishing 6.7% of the country’s domestic debt stock, compared with 0.6% before Turkey's May election Outside of buying stocks and options, hedge funds are notorious for investing in and out of foreign currencies to take advantage of other rates We'll keep tracking these movement for you here 🫡

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'Cliff risk' in credit - the gap between generic pricing and where names trade once the market gets worried about an actual default - is at record highs. Does that say more about low recoveries on credit events - or about the mispricing of the index? Just one of the topics we'll be covering in Satori Insights' webinar on Thursday. https://lnkd.in/d9Eaygcg

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Bigger funds need bigger returns, and as Mark Suster wrote in the past, your fund size is your strategy. At Amazon I learnt how to work backwards on a new idea, and a fund size is a good anchor to work backwards to the specific of your fund strategy including number of investments, ratio for first investment and reserves, average ticket sizing and more. In the last decade, the venture asset class has been outperforming returns from public equities. Here are a few number to understand the evolution of Venture Funding: 2008: Venture's AUM was $300 billion. 2022: Venture's AUM grew to $3.5 trillion. 2008: Number of venture funds was 1,000. 2022: Number of venture funds was 4,000. 2008: Venture fundraising stood on $48 billion. 2021: Venture fundraising stood on $363 billion. Today in 2024, these numbers are way higher as Venture Capital no only matured as an industry, but also as it became more trendy - it is 25% of the entire private capital market. Another reason is that with the surge of cloud computing, building startups is a lot easier, and anyone can start one even if they don't know how to code - they just use Anthropic Claude, or Curser AI. Although the average fund size grew from $83 million to $153.8 million in 2023, these are skewed by the larger funds Andreessen Horowitz, Sequoia Capital and others. Especially, as markets were down, and capital was not available to new and existing fund managers, especially, where numbers of IPOs went down significantly from 2022-2024 according to Coatue (David Schneider), to only 14 IPOs in total during that timeframe, fund managers found creatives way to start. One of those ways is start a Solo-GP and smaller funds. I remember that the only fund I knew was oren zeev's Zeev Ventures. But today, it is the new norm. My friend Maria Rotilu started a Solo-GP $10m fund Openseed VC led by operators with ticket size of $150k. Stefano Bernardi who was a part of the Atomico angel program launched an 18m Euros Solo-GP climate fund to invest in climate tech founders. The trend goes beyond Europe 🇪🇺, Rex Salisbury, ex- Andreessen Horowitz, started his $20m fintech fund as Solo-GP in the US. When I go back to the more established funds, I discover that also the big known funds we know today started small. You can see the evolution of fund sizes along the years raised by Benchmark (Sarah Tavel, Chetan Puttagunta) who started with a $113m fund in 1995, and raised Fund x of $548m in 2020, and also the difference of the funds raised by geography, with a bubble in 1999. It's obvious that as Venture Capital becomes a lot more competitive, raising a decent fund size is important, as you compete with funds that are able to follow on, and build a strong portfolio. However, the reality is that you have to start somewhere, and with the current market you can pivot to start small, at least as a first fund manager. #VentureCapital #FundManagers #RaisingCapital #FundStrategy #FundSize #Investments

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6 𝐭𝐡𝐨𝐮𝐠𝐡𝐭𝐬 𝐨𝐧 𝐯𝐨𝐥𝐚𝐭𝐢𝐥𝐢𝐭𝐲 𝐚𝐧𝐝 𝐫𝐢𝐬𝐤 𝐢𝐧 𝐩𝐫𝐢𝐯𝐚𝐭𝐞 𝐚𝐬𝐬𝐞𝐭𝐬: 1️⃣ Many (not all) PA are valued infrequently and with a lag. This smooths valuations and dampens volatility. Some people like this. This is ok. Just don't automatically assume low vol = low risk 2️⃣ It's more likely for some PA to be properly revalued annually (e.g. real estate) than more frequently. A simple way to overcome the valuation problem is to shift from: - calculating vol of quarterly returns (which are smoothed) - to vol of annual returns (which are more likely to capture revaluations, even if lagged response) 3️⃣ Can also attempt to "add back" some of the vol by using statistical de-smoothing techniques. But can be v.sensitive to the data so interpret with care 4️⃣ Can lean on public market proxies e.g. BB-corp bonds or lev loans for junior infrastructure debt. But also need to appreciate the differences. e.g. infra debt issuers generate more stable cashflows and the debt benefits from backing by a hard asset with long economic life 5️⃣ There are legit reasons why some PA can argue for being lower risk than public mkts (see pic) e.g. superior access to info, asset-backing, cashflow stability, covenants. There are also valid arguments which push in the opposite direction e.g. leverage, more concentrated funds, illiquidity, perf dispersion between funds. These qualitative factors matter 𝐀 𝐜𝐨𝐧𝐭𝐞𝐧𝐭𝐢𝐨𝐮𝐬 𝐛𝐞𝐥𝐢𝐞𝐟 𝐨𝐟 𝐦𝐢𝐧𝐞: Some price movement in public markets is driven by investor fear/greed rather than fundamentals. The behavioural temptation to sell when markets are falling is in itself a contributor to vol The fact that PA investors are often unable to sell their stakes in such an environment prevents them from making the same behavioural mistakes, insulating PA from these sentiment shocks Even plays to their advantage as allows PA investment managers to act in counter-cyclical way Arguably these short-term shifts in sentiment are irrelevant to long-term investors. The fact that they are glossed over in PA vol should not necessarily be misinterpreted as an oversight or “wrong” ▶️So what? Need to look beyond numbers and take account of qualitative factors. Real estate risk is nearer to equities than bonds, despite what vol analysis might suggest. PE is highly diverse. Higher leverage in large cap buyouts means that it would be reasonable to treat the sector as riskier than public equities, but a qualitative case can be made for small/mid buyouts to treated more favourably. Individual VC investments = v.risky, but portfolios have been remarkably resilient 𝐖𝐡𝐚𝐭 𝐝𝐨 𝐲𝐨𝐮 𝐭𝐡𝐢𝐧𝐤? (note: this is summary of the vol/risk section from my recent paper on PA which I'll add a link to in the comments) 𝐋𝐢𝐤𝐞 𝐜𝐨𝐨𝐥 𝐜𝐡𝐚𝐫𝐭𝐬 𝐚𝐧𝐝 𝐢𝐧𝐬𝐢𝐠𝐡𝐭𝐬 𝐨𝐧 𝐦𝐚𝐫𝐤𝐞𝐭𝐬? Follow me 👋 And click the 🔔 at top of my profile to be notified when I post #privateassets #privateequity #schroderscapital

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