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Q3 2020 Private Markets Outlook

US Macroeconomy

After the steepest economic decline in history during Q2, the US GDP skyrocketed by +33.1% during Q3-2020 which is in stark contrast to the -31.4% contraction in the previous quarter. Much of the country was shut down in the second quarter due to COVID-19 and that forced the economy to decline; most businesses reopened in Q3 with economic activity underpinned by increased consumer spending (+41%), gains in business (+83%) and residential (+59%) investment, and improved exports. Although headline GDP growth was very strong, the US economy is not on strong footing with unemployment still at 7.9% which is more than double the pre-pandemic unemployment rate. Some half of the 22 million jobs lost during March and April remain unfilled; 12.6 million people are still without work.

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A Question of Performance

The CEPRES global buyout funds index has outperformed the S&P 500 and the MSCI ACWI – which tracks a broad selection of large- and mid-cap stocks from 47 markets – every quarter in every year since 2001. 

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Comparing Infrastructure Returns Between the Private and Public Markets

Private markets face numerous intersecting headwinds: growing volatility, geopolitical uncertainty, inflation, rising interest rates and more. These events have led to large drops in market valuations of many startups and difficulties raising new capital in follow-on financing rounds.

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Impact of Latest Macroeconomic Factors for Venture Fund Investors

Private markets face numerous intersecting headwinds: growing volatility, geopolitical uncertainty, inflation, rising interest rates and more. These events have led to large drops in market valuations of many startups and difficulties raising new capital in follow-on financing rounds.

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