July 2019 - Chart of the Month

The Difficulty of Being a Leader

Article Source: The Wall Street Journal

As we wrote about last month, its tough being a leader. After years of low interest rates, the search and ability to produce above average risk-adjusted returns has been difficult. The popularity and the growth of private equity has flooded the asset class with billions of dollars forcing firms to move higher and higher in the market. The WSJ reported the anticipated closing of Blackstone’s $25 billion fund, as one can image, where does one invest all of this money? That is most simply the problem in private equity, in lending, in investing, etc. the field is crowded, flush with cash and as always, competitive. In order to be a leader, one most possess the ability to move quickly, find novel investments and stay patient, its not an easy market. As the article highlights the ability of these Megafunds (PE funds with AUM > $10 billion) to outperform the market is proving difficult.