Last week, I attended the Australian Private Wealth Forum hosted by Markets Group. The event offered a well-balanced mix of thought-provoking panels and provided a fantastic opportunity to explore a wide range of investment ideas all in one place. It gave me plenty to ponder, but here are my key takeaways:

• The Ongoing Debate Between Listed and Unlisted Assets: A major focus of the conference was the role of private markets in investment portfolios. There was considerable discussion around the illiquidity premium offered by private markets (you can find an explanation of this concept here), which makes them attractive. One speaker made an insightful point that accessing the illiquidity premium hinges on selecting the right manager. The challenge with private markets, taking private equity as an example, is that there’s no average manager; they’re either exceptional or poor —there’s no middle ground (I call it zero or hero). If you end up with a poor manager, you miss out on the illiquidity premium because you don’t make any money, and by the time you realise it, likely five years in, your money is already locked in for a decade with no way out. This is why manager selection is absolutely critical with illiquid assets—getting it wrong means no return, no illiquidity premium, and your investment is tied up for 10 years.

• Interest Rate Trajectory is a Hot Topic: It was fascinating to observe how much the trajectory of interest rates dominated the conversations among high-net-worth investors and advisers. During a compelling panel on the economy and interest rates, Sally Auld from JB Were predicted RBA rate cuts before the year’s end, arguing that rates are about 100 basis points higher than they should be. This contrasts with my own view, as I don’t foresee any rate cuts happening here before the end of the year.

• The US Deficit as a Potential Market Disruptor: The US budget deficit emerged as a potential outlier issue that could disrupt markets. It seems like it is an issue that everyone knows is out there but this was the first time in which I have seen considerable time spent on the discussion.

• Private Credit Remains Hot: It was no surprise that private credit continued to be a major topic. Praemium reported that 50% of the funds they reviewed for inclusion on their platform in the last financial year came from the private credit sector. However, the conference maintained a balanced discussion on the sector, unlike other high-net-worth conferences where private credit often dominates. Personally, I remain very cautious about this sector. When everyone is running towards a sector I am usually running away. It must be my inner contrarian. You can read more about my views on private credit here.

• Bitcoin is Back: There was an entire panel session dedicated to Bitcoin and its associated jargon, most of which is still a mystery to me! It’s been a couple of years since I’ve seen Bitcoin discussed at an investment conference, and they presented it as an asset class, which I found amusing. In my view, Bitcoin is not an asset class, nor is it an investment. It’s only worth what someone else is willing to pay for it. I think it is closer to a Ponzi scheme than anything else. Who knows – I could be wrong?

There’s no doubt in my mind that private markets play a crucial role in high-net-worth portfolios. The conference provided a valuable opportunity to consider the opportunities and risks these investments bring and to meet a diverse range of managers in one setting. Kudos to the Markets Group team for organising such a well-run, thought-provoking event. I’m already looking forward to next year’s conference.

Kind regards,

Shelley Marsh
Outsourced Chief Investment Officer (OCIO) & Founder
Wealth Differently

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