Featured in the Financial Times:
Patrick Jenkins rightly challenges the optimism surrounding Private Capital and captures both its promise and pitfalls in the evolving landscape of Institutional and Retail Investment (“Private Capital: Growth opportunity or minefield?”, Business Insight, Opinion, May 19). But one critical risk goes unaddressed: The Data deficit.
As policymakers and Asset Managers push to expand into Private Markets, pension savers’ cash will be funnelled into complex, illiquid assets with limited visibility. The reality is that the operational processes surrounding Private Assets differ considerably from those associated with the “safer” assets pensioners are typically invested in.
Private Assets inherently exhibit very different risk and return characteristics than their public counterparts. While public equities offer daily price transparency, the valuations of Private Assets are not readily available. As a result, risk assessment and performance forecasting processes become all the more challenging, costly and resource intensive, and leads to generating a new dataset that is isolated from existing Investment Portfolio Data infrastructure.
Pension savers deserve better than seeing fiduciary standards compromised by those eager to chase the allure of Private Markets amid sluggish returns elsewhere. Private Capital may well offer long-term promise, but it is no silver bullet for investment returns — at least not without robust Data infrastructure.
Until this is treated as fundamental to realising that promise, Private Market strategies risk being built on opacity rather than opportunity — on aspiration, rather than accountability.
Yann Bloch, Product Manager, NeoXam, Boston, MA, US
