Private market low volatility is an illusion exposed in distressed markets
Matt Whineray · Matt Whineray – Leading New Zealand Super Fund (Capital Allocators, EP.108) · Sep 9, 2019 · at 1:01:55
Matt Whineray, CEO of the New Zealand Superannuation Fund, discusses his biggest investment pet peeve regarding pitch claims about private market asset volatility.
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“I think it probably comes down to when you're receiving pitches, people have what I think of as kind of imaginitis around the lack of volatility of private market assets. So Yeah, you get this bit, which is, oh, these things aren't volatile. It's like, okay, well, why is that? Well, the best evocation of that I've seen is, you know, if you imagine a bat flying, and the bat is quite jerky, and it's flying all over the place, then it flies into a pipe, and then it flies out of the other end of the pipe, And what these people who think about this volatility of illiquid assets would have is that the fat is actually flowing in a straight line from one end to the other because that's where they've measured it at the start. I think you'll really find out how volatile those things are when you're going to try to sell them in a difficult market, and that's probably my biggest one.”
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