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Many alternative investments won’t return to pre-pandemic values before 2022, says Duff & Phelps research

A high proportion of alternative investment assets won’t return to pre-pandemic values before 2022, according to the results of a new survey by Duff & Phelps.The survey, which polled senior officers within the alternative investment industry, found that 80 per cent of respondents believed up to 30 per cent of private market investments won’t return to pre-pandemic levels until 2022 or beyond.  hese findings contrast the soaring public markets most investors have seen since the pandemic.

Ryan McNelley, Managing Director, Portfolio Valuation at Duff & Phelps, says:“The fact that private markets aren’t rising as quickly as their public counterparts shouldn’t worry investors. Considering the economic uncertainty we are currently facing and the drastic restrictions impacting businesses across the globe, private markets are perhaps being more realistic about the challenges of Covid-19 on the wider economy.”

Looking ahead to the regulatory landscape for 2021, 41 per cent of respondents agreed that improved rigor and governance around estimating the fair value of companies and assets should be the top priority for the alternative investment industry. Interestingly, governance around fair value estimates was deemed more important than demonstrating ESG focus and results, with only 21 per cent of respondents saying that ESG should be the regulatory priority in 2021.

The survey also asked investment professionals whether ESG focused investments could be measured accurately when compared to non-ESG investments. In response, most investors (57%) said they felt confident that ESG investments can be measured against non-ESG, and that a framework for investment principals can be developed.  

McNelley says: “While ESG is an important topic for the investment community, these findings suggest that liquidity concerns and proper governance regarding valuation of alternative assets are topping the agenda for investors as we enter an uncertain 2021. That’s not to say ESG won’t be a focus though; there is definitely some optimism around the possibility of coalescing around an ESG framework, which is promising to see.”

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