Research: Investment professionals use different investment strategies for public and private markets
According to research conducted by Funds Europe, more than 60% of investment professionals have indicated employing distinct investment strategies for private markets compared to public markets. However, a significant 30% do not differentiate between the two.
The comparison of sustainability between traditional asset classes like publicly listed equities and bonds has been more straightforward, while it has proven to be more challenging for private assets due to their lower transparency.
The survey respondents pointed out the operation of varying strategies for different asset classes but often maintain an overarching approach focused on sustainability and Environmental, Social, and Governance (ESG) principles.
The research further highlights that dedicated ESG teams suggest ESG risk management has evolved into a discipline. One respondent emphasized the historical emphasis on financial returns in private equity businesses, though they acknowledged a shifting landscape as sustainability gains increasing prominence.
It was noted that public markets adhere to stricter reporting and transparency guidelines, some specifically targeting sustainability. Private market investments, on the other hand, tend to concentrate on long-term impact and customization, while public market investments offer liquidity, transparency, and scalability.