Performance concerns through the year

Inflation and interest rates enter investors’ list of top three worries this year, as fears of a recession persist.

Rising interest rates and inflation have become key concerns for investors taking part in Private Debt Investor’s LP Perspectives 2023 Study, for the first time pushing extreme market valuations out of the top three factors they expect to impact the performance of their private markets portfolios.

Central banks, such as the Bank of England and US Federal Reserve, have been raising interest rates to curb soaring inflation. The Bank of England increased rates from 0.1 percent in December 2021 to 3 percent in November 2022, while the US Federal Reserve hiked the federal funds rate by 0.75 percentage points for the fourth time in a row in November, to 3.75-4 percent.

Fears of a recession, however, have been a consistent worry among LPs in the past few years, though the circumstances surrounding this have varied, with covid-19 most notably taking its toll following widespread outbreaks and subsequent lockdowns in 2020.