Reading Time 5 Mins
Leveraging macroeconomic forecasts, Ben’s risk management team develops long-term capital market assumptions (CMA) on a quarterly basis. These assumptions inform proprietary private fund models, which are tailored to each alternative asset class. The team created a scenario analysis based on 2021 conditions and examined two forward-looking five-year projections, a baseline economic forecast and a potential downside scenario, considered a bear scenario.
“In order to demonstrate the benefits of portfolio construction in private assets we leverage our TPM framework to illustrate opportunities available to investors with access to diversified portfolios and liquidity options to execute rebalancing strategies. A key component of a healthy portfolio is the ability to actively rebalance based on available risk/reward trade-offs across market exposures, asset classes, and fund types.”
-Yuri Mushkin Chief Risk Officer, Beneficient
The baseline forecast assumes that the global economy remains stuck in a demand-deficient rut. It assumes that social distancing is relaxed while monetary policy remains accommodative with limited impact on demand and little room for further cuts. And it assumes that both inflation and interest rates will remain low.
The bear scenario explores the impact of a significant resurgence in the virus, associated restrictions on economic activity, a renewed wave of contraction in credit supply, and governments failing to sufficiently support the economy. The result is weak medium-term growth and poor equity market returns.
- There is considerable dispersion in performance across market cycles, between individual private funds but also between private fund strategies.
- Allocating to a specific strategy does not appear as rewarding when adjusted for risk and compared with a diversified portfolio of private assets.
- Strategic rebalancing and tilting a portfolio towards certain fund strategies and sectors can be a source of outperformance.
Within Ben’s report, “Maximizing Opportunities in the Private Market,” the baseline and bear forecasts are fully illustrated, providing extensive chart details and discussion analysis on the possible opportunities for strategic rebalancing by utilizing Ben’s Total Portfolio Management framework to analyze the risk/reward profile of private assets under the forecasted market environment.*
These materials are provided for illustration and discussion purposes and are not intended to be and do not constitute financial, tax, legal or investment advice or recommendations, or an offer to sell or exchange, or the solicitation of an offer to buy or exchange, any securities. Any offer, sale or exchange involving securities of The Beneficient Company Group, L.P., and/or any of its affiliates, subsidiaries and successors (collectively, “Ben”) may be made only to qualified, eligible customers or investors and solely pursuant to applicable definitive agreements and documents, such as a confidential private placement memorandum, subscription agreement, purchase agreement or similar documents (collectively, “Definitive Documents”). These materials are not intended for, and do not take into account the particular business, investment or other objectives or financial circumstances of, any specific customer or investor or type of customer or investor. Investments involve risks and are not suitable for all persons.
Neither Ben nor its personnel make any express or implied representation or warranty as to the accuracy, timeliness or completeness of the information contained in these materials or shall have any liability resulting from your use of these materials. Ben is under no obligation to, and may not, update, correct, or supplement these materials. The information herein is as of the date indicated, is summary in nature, is not complete, is subject to change (including new information that may be included), is not intended to provide the basis for evaluating any transaction with Ben, and, as applicable, is qualified in its entirety by the relevant Definitive Documents, which in such case supersede these materials and contain important information, including about associated risk factors and conflicts of interests. As applicable, as disclosed in the relevant Definitive Documents, Ben entities will receive various fees in connection with the product and services provided, such as, but not limited to, brokerage commissions or trustee, administrative or custodial fees. No representation is made that the investment objectives of any investment or program participation will or are likely to be achieved or successful or that any investment or program participation will make any profit or will not sustain losses, including loss of principal. Past performance is not indicative of future results. Prospective customers or investors are encouraged to perform their own due diligence and to consult with their tax, financial and other professional advisors before making any decision to complete a transaction with Ben.
Certain information has been provided by and/or is based on third party sources. Although believed to be reliable, the accuracy, completeness and timeliness of such information, including any underlying assumptions, has not been independently verified by Ben. Any opinions, statements or the like (collectively, “Statements”) regarding future events or which are forward-looking, including any targets or targeted goals, are for illustrative purposes, are based upon available information including third party information, and constitute or reflect only current subjective views, beliefs, outlooks, goals, assumptions, estimates or intentions, including business strategies, anticipated future plans and business financial projections of Ben, should not be relied on, are subject to change without notice due to a variety of factors, including decisions made by Ben management, fluctuating operating results, and business, economic, competitive and market conditions and factors, and involve inherent risks, changes and uncertainties, both general and specific, many of which cannot be predicted or quantified and are beyond Ben’s control. Any performance targets or objectives should not be relied upon as an indication of actual or promised future performance, which will fluctuate, including over short periods, and are only intended as a guideline to help evaluate an investment or program participation’s strategies and features along with any benchmarks or indices shown. Statements may be based upon underlying assumptions and analyses made by Ben or third parties. Future evidence and actual results could differ materially from those set forth in, contemplated by, or underlying these Statements and third-party information, and even if realized may not result in the expected results to, or have the expected effects on, Ben, any investment, or program participation. In light of these risks and uncertainties, there can be no assurance and no representation is given that these Statements are now, or will prove to be, accurate, realized or complete in any way. Ben does not undertake any obligation to revise or update these Statements, including to reflect events or circumstances after such date or to reflect the occurrence of unanticipated events.
Any benchmarks and financial indices are shown for illustrative purposes only and are provided for the purpose of making general market data available as a point of reference only. Such benchmarks and financial indices may not be available for direct investment, may be unmanaged, assume reinvestment of income, do not reflect the impact of any commissions, fees and costs, and have limitations when used for comparison or other purposes because they, among other reasons, may have different volatility, credit, or other material characteristics (such as limitations on the number and types of securities or instruments). No representation is made that any benchmark or index should be relied on as a measure for comparison.
Securities brokerage services are offered through Ben Securities Company L.P. (“Ben Securities”), which may provide certain materials to recipients. Ben Securities is affiliated with Ben and is a broker-dealer registered with the Securities and Exchange Commission and various states and a Member FINRA/SIPC. You can obtain more information about Ben Securities (see https://brokercheck.finra.org/firm/summary/119441) and its registered persons by visiting https://brokercheck.finra.org/. The registrations and memberships above in no way imply that any governmental or regulatory authority have endorsed the entities, products or services discussed herein.
Let’s have a conversation about the insights and trends revealed in our Private Markets report and what Ben’s secondary market liquidity solutions could mean for your investment portfolio.