RELPI Roundtable: Alternatives in 2022: Issues and opportunities

Developed in collaboration with MUFG Investor Services

Part 2 of 3: What’s Behind the Agility and Robustness of the Alternatives Asset Class?

Jonathan: I’m Jonathan Schein, CEO and Executive Director of the Real Estate Limited Partner Institute, and I’m excited and privileged to lead this three-part roundtable discussion on some of the most important topics facing the alternatives industry.

In our last discussion, we talked about relationships — and why they are central to everything in private markets. Today, we dive more deeply into what makes alternatives so resilient, so special — and where its growing acceptance as an asset class may be leading us. My guests are two key players in these markets — Gila Cohen, Chief Investment Officer of MUFG; and Lorelei Graye, president of Private Capital Data Standards (PCDS), a nonprofit industry organization focused on standardizing and optimizing reporting in alternatives to enable more efficient adoption of this dynamic asset class.

JS: Alternatives have performed incredibly well during the pandemic. With assets under management at record highs — and predictions of continued robust growth for the next five years — it makes sense to ask: what is it about this asset class that makes it so resilient?

Gila: More than any other asset class, alternatives are driven not by algorithms but by intelligence — human intelligence — which is another way of saying agility and creativity in the face of uncertainty or technological breakthroughs. Look no further than the outperformance of private equity and real estate in these pandemic years for evidence of that.

Gila Cohen,

Chief Investment Officer of MUFG

Lorelei: Absolutely. And I think it comes down to a simple fact: in private markets, disruption is opportunity. While COVID has been a human and global health crisis, from a strictly investment and business perspective, it’s a disruption. And in inefficient markets like ours, disruption, limitations, exclusivity, access, network — all of these create an opportunity set.

Gila: It’s not just the pandemic, of course. This is an asset class that seeks and finds strategies and value in emerging trends — from bitcoin and blockchain to 3D printers, new ESG standards, and more. There’s no doubt in my mind that private markets are the wave of the future.

JS: If alternatives are doing great for investors already because they thrive on disruption and hidden opportunity, then why are standardization, benchmarking, transparency, etc., suddenly so important?