NEPC’s Kristin Reynolds was quoted in a recent FIN News article to discuss vintage years and real estate markets. View the article on FIN News’ site here.
As nonprofit investors expect market volatility to continue, with the possibility of an economic recession on the horizon, many are seeking early-stage private equity, private debt, real estate, infrastructure or hedge fund strategies to capitalize on macro trends that include a slowdown in economic growth, rising inflation, emerging technologies and demographic trends.
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The historical performance of funds from recessionary periods was one reason that investment consultant NEPC is advising clients to commit to 2023 vintage funds, even if they have concerns about their portfolio’s liquidity, according to Kristin Reynolds, partner and practice leader, endowments and foundations.
“Historically, some of the best vintage years were when markets had a little more distress. If clients are concerned about liquidity, we’ve said to reduce the level of investments to each manager in their portfolio. We think the private equity GPs will start feeling pressure to deploy and they’ll find opportunities,” Reynolds said.
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NEPC’s Reynolds sees that real estate markets are varying based on property type.
“The core real estate funds have seen marks of 10% to 15%, and we’re seeing positive appreciation of industrial, but that’s really off set by off ice and retail, based on changing market dynamics. So, you are getting the inflation hedging, but maybe more so in the broadly diversified funds,” she said.