Secondaries restraint

Some secondaries managers did not do a good job timing the market, and are suffering with stakes in underperforming funds, writes Anna Dayn.

The secondary business is not without risks. Having a macro perspective and a sense of market timing are incredibly important.

We value secondary investors who factor a nuanced understanding of the larger economic context into their investment pace. Many secondary managers have gotten their timing all wrong and are stuck with funds where a large part of the investments were bought at a premium during the boom years.

Anna Dayn

It is clear that the best stewards of investor capital in the secondary market were conservative in deploying capital at the high priced environment of 2006-early 2008. 

We believe the consequences of the recent recession are far from clear yet. There is a potential for a prolonged period of deleveraging, and implicit in this potential is also the likelihood of increased volatility.

Our approach to secondaries is to invest with those groups who can prove that over time they have been prudent in the use of investor capital and did not invest blindly.

Anna Dayn is head of private equity at pension consultant Cardano.