Private market investments “get put on a pedestal too much” and “do not actually make the members a lot of money”, People’s Partnership CIO Dan Mikulskis has warned.

Speaking at the PLSA Investment Conference 2024, Mikulskis highlighted that “there can be good investments in private markets and a lot of bad investments as well”.

“There are certainly a lot of ways to do private markets that make fund managers and people who own them a lot of money that don’t actually make the members a lot of money," he stated.

"So working on getting a fair split of the economics is something that really needs to be worked on.

"There is often a fundamental unfairness in how the economics are shared between the manager and client. So I do think there needs to be a bit of a step change to get the right results for members with that.”

Mikulskis clarified that People’s Partnership does not currently invest in private markets but may do so once “we grow and get to the right scale”.

However, “I tend to think that private markets gets put on a pedestal too much”, he added.

Looking at fixed income, now that “people are saying bonds are back and have been for a good year or so with rates higher now”, Mikulskis also suggested that there is “quite a lot to think about with where you want to be on the curve of credit – do you want short-dated or medium- to longer-dated, what the role of fixed income is in a DC scheme, sitting alongside growth assets as a volatility dampener and also as a big part of the pre-retirement portfolio”.

There is quite of bit of work to be done there in the DC market generally with how we approach the ‘vanilla’ fixed income specie, he added.

Mikulskis also recommended not getting ‘distracted’ by short-term trends, such as the upcoming general election.

“The elections this year and geopolitics deeply matter to people’s lives but the biggest risk to investors I think arguably is that we get too distracted by them and get distracted into making decisions off the back of them that aren’t quite right,” he stated.

“The history of the market shows that they do go through election cycles pretty well and even if they don’t, it’s really hard to predict what’s going to happen. It’s really underappreciated how hard it is to actually set stuff up to screen for that noise and think deeply about what you need to actually focus on the long term.

“One positive example of that is that I see more asset managers sharing their long term expected return forecasts, rather than just ‘is there going to be a recession this year’ type commentary, which in my view is just noise,” Mikulskis added.

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