If you would like information about this content we will be happy to work with you. We strive to provide individuals with disabilities equal access to our website. Venture capital (VC) bucked the broader trend with strong growth, driven by outsize interest in tech and healthcare. Growth in assets under management (AUM) and investment performance in most asset classes eased off in the spring, as the industry adjusted to new working norms, then came back strong in the latter half of the year. Overall funds raised declined year on year due to an apparent short-term discontinuity in the early months of the pandemic, but the prepandemic pace of fundraising returned by the fourth quarter (Exhibit 2).
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All things considered, it was a relatively strong year for PE fundraising.This time, most LPs seem to have learned from history, as investor appetite for PE appears relatively undiminished following the turbulence of the last year. During the global financial crisis (GFC) in 2008, many limited partners (LPs) pulled back from private asset classes and ended up missing out on much of the recovery. Please email us at: PE investors appear to have a stronger risk appetite than they did a decade ago. We highlight several trends in particular: The most in-depth research continues to affirm that, by nearly any measure, private equity outperforms public market equivalents (with net global returns of over 14 percent). The strength and speed of the rebound suggest resilience and continued momentum as investors increasingly look to private markets for higher potential returns in a sustained low-yield environment (Exhibit 1). Private equity (PE) continues to perform well, outpacing other private markets asset classes and most measures of comparable public market performance.
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The year also saw a deeper focus for private markets firms on their people, the set of factors they consider when investing, and the ways they work. Following a second-quarter “COVID correction” comparable to that seen in public markets, private markets have since experienced their own version of a K-shaped recovery: a vigorous rebound in private equity contrasting with malaise in real estate a tailwind for private credit but a headwind for natural resources and infrastructure. We typically assess meaningful change in the industry over years or decades, but the COVID-19 pandemic and other events spurred reassessment on a quarterly or even monthly basis. The year 2020 was turbulent for private markets, as it was for much of the world.