by Andrés Ramos, Content Marketing Specialist – eVestment Private Markets
Consultants sound off
Released last week by eVestment, Consultant Outlooks: 2021 is an aggregated look the capital markets assumptions compiled from six industry consultants: Aon, Callan, Meketa, NEPC, Verus, and Wilshire.
Sourced from eVestment Market Lens from December 2020 through February 2021, the data offers a look into what these six top consultants expect to see in the private markets.
Average return expectations decline for 2021
Ten-year returns fell in 2020 when compared to 2019 across virtually all asset classes, and consultants expect to see those trends continue in 2021. Preliminary returns assumptions for 2021 are 8.38% and 6.21% for private equity and private debt respectively. Infrastructure and core real estate were the lone strategies with stronger performance in 2020 than 2019 however consultants are signaling that returns for both strategies are expected to decrease in 2021.
Volatility ratchets up for private equity
While returns assumptions for private equity are higher than most strategies, assumptions about volatility for the asset class are also sky high at 27.37%. This figure is a 220 basis point increase from 2020 and substantially higher than the volatility of almost all other asset class, public or private. Emerging markets equity was the closest to private equity at 26.58%. For context, private debt volatility assumptions stood at 13.44% for 2021.
|Asset Class||Avg Expected Return (Geometric)||Avg Expected Volatility|
|RE – Core||5.35%||13.43%|
|RE – Opportunistic||9.47%||24.20%|
|RE – Value-Add||7.68%||18.20%|