JPMorgan Asset sees strong era for private equity, hedge funds

Bloomberg

The current difficult market environment will create fertile ground for private equity and hedge funds to boost their performance, according to JPMorgan Asset Management.
Expected returns for cap-weighted private equity have risen to 9.80%, up 1 percentage point from the last forecasts issued September 30, John Bilton, head of global multi-asset strategy, wrote in a note. The money manager’s projections “continue to be relatively aggressive for both hedge funds and private equity,” he said, and the pandemic-induced market volatility “actually reinforces our conviction that there is a good medium-term outlook for alpha generation.”
“Dry powder on private equity balance sheets can be deployed now at lower entry multiples, broadly offsetting higher debt funding costs,” Bilton wrote.
While the coronavirus-induced turmoil is hurting the economy, Bilton doesn’t see much in the way of “first-order” changes — he doesn’t envision the recession as significantly altering potential growth in the long term.