Qubit: Hamilton Lane Market Overview 2023
From 2002 to 2019 there was only one negative year for seed/early venture.
That was 2002 during the dot-com bust.
Otherwise, it was one of the top asset class performers for most of the years during that period.
“A regular in our market overviews, the periodic table of partnership returns packs a lot of information. (It’s a lovely kaleidoscope of color to boot!)
The color sweep of yellow at the bottom in earlier vintage years, then across the top (along with red) beginning in the 2005-2007 period, shows the dramatic underperformance, and subsequent outperformance, of VC/growth over that time. Similarly, the movement of dark green and pink in the opposite direction shows the shift in distressed investing and natural resources. We’ll point out that infrastructure hovers lower because its return profile is lower. Will those patterns shift again? Many argue that VC is headed into a period of significant underperformance. We’re not sure on that one, though we doubt the yellow colors will remain at the top of the charts. We’ll also reiterate two other points we make year over year:
It’s imperative to know what portfolio strategy you want. It is tempting to pick the hot sectors and avoid the lousy ones, but when you see what the average returns are, the white line across the middle, a strategy of investing in the boring sectors that always hover around that line will get you the returns you want from the private markets. Strategy first, tactics second!
The risk of loss is low across partnership investing. The worst-performing strategies have usually had positive returns. That is a comforting notion as you consider what your risk is in these markets.”
Source:
Hamilton Lane - 2023 Market Overview
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