S&P Global — 20 September 2024
Daily Update: September 20, 2024
Benchmarking Private Markets for Greater Performance Transparency
By Nathan Hunt
Start every business day with our analyses of the most pressing developments affecting markets today, alongside a curated selection of our latest and most important insights on the global economy
Private markets are often opaque. Large institutional investors in private markets trade additional risk for higher potential returns by providing private credit or investment to nonpublic companies. However, investors in a private equity or venture capital fund will sometimes wonder if the general partners of that fund are providing market-beating returns that justify the fees paid. Private markets benchmarks allow these investors to compare the performance of their funds with the aggregate performance of other funds that have similar investment strategies.
Cambridge Associates, in partnership with S&P Dow Jones Indices, collects data directly from private investment fund managers and then aggregates and anonymizes it to provide benchmarks against five main strategies: private equity, venture capital, aggregated private equity and venture capital, private credit, and real assets. The Cambridge Associates platform tracks over 98,000 investments, 10,000 private investment funds and over 15,000 operating metrics, and it maintains over 6,600 general partner relationships.
Benchmarking against these broad categories is important, and it’s natural that the performance of private investment funds varies over the life of the fund. Investments are typically locked in for several years and returns are back-weighted, as investments made at the beginning of the fund’s life only begin to return value toward the end. Accurate benchmarking of private markets requires knowledge of these unique market dynamics as well as different disclosure and reporting practices.
It is possible to see these private markets benchmarks in action in 2023. Last year, the benchmark for US venture capital shows that funds had to deal with a challenging environment; for the first three quarters, the benchmark showed negative performance, followed by a modest gain in the fourth quarter. However, US private equity enjoyed four straight quarters of positive returns, according to the Cambridge Associates benchmarks. The venture capital and private equity benchmarks of Asia and Europe had similar patterns.
Private credit markets have experienced incredible growth over the past few years, as displayed by Cambridge Associates’ 2023 benchmarks. Global private credit and US private credit benchmarks showed positive returns for each quarter, with consistent returns of about 2%-3% per quarter and 8%-12% for the year. Private real estate investments had a more challenging 2023, with four straight quarters of negative performance, according to the benchmarks.
As private markets continue to evolve with the emergence of new equity, debt and real asset strategies, benchmarks must also evolve, focusing on strategy-specific performance to provide value to institutional investors and other market participants looking to gauge fund performance.
Today is Friday, September 20, 2024, and here is today’s essential intelligence.
Path To Net-Zero: US Utilities Face New Headwinds On Decarbonization Journey
Most large US power companies are gaining ground on decarbonization, with several utilities approaching the net-zero finish line. However, progress was uneven in 2023 and new challenges lie ahead, a survey by S&P Global Commodity Insights showed. Extreme weather, rapidly rising energy demand, grid interconnection delays and opposing state policies can hamper progress for the most ambitious of power companies, the survey results indicated.
—Read the article from S&P Global Market Intelligence
Comparing The NBS And Caixin Manufacturing PMI Surveys
Comparisons between two PMI surveys for mainland China — one published by the National Bureau of Statistics of China (NBS) and the other by Caixin, compiled by S&P Global Market Intelligence — have often been made, especially during times when the figures diverge in short-term trends. Here we explore the most recent divergence for the manufacturing gauges in more detail, and draw the conclusion that both surveys are in fact sending similar signals on the health of the manufacturing economy in mainland China.
—Read the article from S&P Global Market Intelligence
European Banks: Preparedness Is Key To Unlocking Central Bank Funding
The ECB and BoE's intention to maintain a stock of ample reserves in the European banking system will give banks permanent access to central bank funding as and when they require. Positively, S&P Global Ratings believes that this will give the central banks a significant role in banks' funding and liquidity risk management.
—Read the article from S&P Global Ratings
Shrimp Prices In Ecuador, Europe Rise Amid Reduced Supply
Lower supply coupled with firm demand have been boosting prices of shrimp in Ecuador and Europe in recent weeks, also affected by seasonal factors, market sources told S&P Global Commodity Insights. Cash prices for shrimp have increased in both regions, with Platts — part of Commodity Insights — assessing the Ecuador shrimp marker at $5,400 per metric ton FCA Guayaquil on Sept. 16, compared with $4,800/t on Sept. 2. Meanwhile, the HOSO shrimp CIF EU was $5,450/t on Sept. 16, up from $5,100/t on Sept. 2.
—Read the article from S&P Global Commodity Insights
The New Pragmatism: Scenarios To Understand A Volatile Energy Transition
Global markets are positioned for significant and structural change in the coming years, but the energy transition will likely not occur fast enough. However, new potential pathways for global energy and emission trends could open up. The 2024 S&P Global Commodity Insights Energy & Climate Scenarios describe these potential pathways to the future and indicate what events could accelerate or delay the global energy transition.
—Read the report from S&P Global Commodity Insights
September Light Vehicle Production Forecast
This month's global light vehicle production forecast represents ongoing challenges with managing production and inventory amidst volatile demand and uncertainties surrounding electric vehicle (EV) adoption. Forecasting downgrades due to weaker demand fundamentals, timing actions and macroeconomic pressures. While some regions like South America show signs of improvement, overall, global light vehicle production has been revised down for the near-to-intermediate term.
—Read the article from S&P Global Mobility
Webinar: APAC’s Growing Influence On The Connected Devices Market (Sept. 25, 2024)
The Asia-Pacific region is home to a growing addressable audience of digital consumers as broadband subscriptions increase, inflation rates ease and more homegrown content emerges. In this webinar, we examine the trajectory of devices such as smart phones, smart TVs, game consoles and AR/VR headsets as well as some of the content flowing through these devices to end users. Join S&P Global analysts for a discussion on the current and future state of the connected devices segment in the Asia-Pacific region.
—Register for the free webinar from S&P Global Market Intelligence