WEBVTT

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Some of the

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misconceptions relate to the perceived
infinite Sharpe ratios in private

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asset classes
because the marking has been slower.

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What we're seeing now with the drawdowns
in the listed BDC space,

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is that a lack of liquidity
doesn't necessarily translate

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into or equate to a lack of risk.

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Some of the model-based approaches
that have worked

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very well in equity
markets can lead you down some dangerous

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paths in the credit markets,
because the data quality is so different.

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There needs to be an understanding
of how the data was created

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and what it actually means.

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Historically,

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public and private markets,
which are very different markets,

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the combination of those
has been quite complex

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because of all of the differences
in data and investment structures.

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And all that complexity
has been put on allocators.

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With borrowers
now having much greater fluidity

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and versatility
in how they approach the capital markets,

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there's an opportunity

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for a lot of that complexity
to be put on investment managers.

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The matrix is a really simple tool,

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but it has helped to ground the client
conversations

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around some key objectives, namely,

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“What
is their tolerance for illiquidity?,”

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“How much credit risk
are they willing to take?,”

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and, “What type of return
objective are they targeting?”