Investment performance in volatile times

In recent years, there has been a growing short term difference in performance when in unlisted assets, such as private equity and real estate, as opposed to listed assets, such as stocks and bonds. The main difference between these two types of investments is that unlisted assets are not traded on public markets, whereas listed assets are. This difference can have a significant impact on the performance of various investments.

Investing in unlisted assets can offer higher returns than listed assets. This is because unlisted assets are typically less liquid and therefore, less efficient, so there is a greater potential for mispricing, particularly in correcting markets.

However, there are several disadvantages to investing in unlisted assets. One of the main drawbacks is that they are often less transparent and less regulated than listed assets. This can make it more difficult for investors to assess the value of an investment and monitor its performance. Additionally, unlisted assets typically require a larger investment, which may be less accessible to individual investors. Furthermore, the lack of liquidity can make it difficult to sell an unlisted asset if an investor needs to raise cash.

In recent years, with the impact of COVID-19, unlisted assets such as Real Estate and Private Equity have come under pressure due to the disruption of cash flows and uncertainty in the market. This has led to a decline in the performance of these investments. On the other hand, the listed assets, such as stocks, have been more resilient and have seen a recovery in their performance.

Overall, investing in unlisted assets can offer higher returns, but it also comes with greater risks and less transparency. It is important for investors to carefully consider these factors before making any investment decisions. It is essential to conduct thorough research and due diligence.

Please reach out to one of our financial advisers before making investment decisions.