This is due to a few factors, including the denominator effect, the numerator effect, and what the report calls “the fear effect,” where lower public markets almost invariably cause some investor pullback in illiquid investments.
The Market Overview by Hamilton Lane also highlighted some worrisome indicators within buyouts and real estate sectors in particular and encouraged investors to proceed with caution.
"While this is not to say there aren’t interesting transactions to be done or high-quality general partners that are raising capital today, the report indicates that investors should be disciplined throughout 2023 and beyond," the report added.
Mario Giannini, chief executive of Hamilton Lane and author of the report, said: “The asset class is evolving in offerings and structure to meet the demands of a varied and growing set of investors.
“Those who employ discipline, stay consistent across sectors and through cycles, and view the private markets as a long-term asset class will be best positioned.”
