The Epic Funds team kicked off the year with an all-hands Webinar focused on reviewing 2024 private market trends and peering into the future on what 2025 is likely to bring.  Participating in the lively event were Epic Funds’ three co-founders—Alec Garza, Jimmy Hirschmann, and Michael Fitzpatrick.  Val Whittaker, Epic Funds’ Director of Investor Solutions, hosted the webinar. 

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2024 Key Trends

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The partners opened the discussion outlining four key trends that they believe drove private markets in 2024: 

• General Partners (GPs) and LP Limited Partners (LPs) consolidation – Asset managers were increasingly focused on consolidation to build multi–strategy platforms while investors such as family offices and financial advisors looked at combinations to better position themselves to serve the wealth channel. Key examples: BlackRock’s acquisition of HPS and Pathstone’s acquisition of Hall Capital.
• Rise of private markets platforms – There was significant growth in private markets platforms such as iCapital and CAIS to (1) serve accelerating demand by retail investors looking to access private markets and (2) provide a marketplace for asset managers to sell new innovative products.  Platforms also are stepping in to play an important role providing education services (e.g., CAIS’s partnership with JPMorgan Asset Management).
• Improvements in the allocator operating system– Increasingly, fintech companies are digitalizing fund manager processes and procedures to simplify workflows such as due diligence, performance analytics, document aggregation. Thanks to firms such as Cobalt and +Subscribe, asset managers such as Epic Funds can stay lean and efficient.
• Innovations in fund structures – The dearth of exits and distributions have encouraged the use of continuation funds by GPs to provide LPs with liquidity and enable fund managers to hold on to trophy assets longer. Similarly, in response to growing demand for access to private markets from financial advisors and retail investors, asset managers are offering semi-liquid or evergreen funds that provide continuous capital deployment, periodic liquidity, and lower minimum investment requirements.

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Big Questions Going Forward

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Looking ahead to 2025, a key question for the Epic Funds team: where does the push into the wealth channel and providing access to retail investors take the industry?  Will this lead to new retail-investor oriented fund structures overtaking traditional drawdown funds?  Will it require distribution strategies and new partnering arrangements?  Will it prioritize education in marketing spend?  

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A second question is who comes out ahead from the industry’s transformation and disruption? Is it the asset manager creating better fund structures to raise more capital and access more investors, or is it the investor who gains better diversification and potentially higher returns? Or both?  Is it the asset manager with the better fund offerings and scale, or will it be financial institutions (with pre-existing scaled distribution infrastructure), or platforms that bring tremendous ease-of-use and flexibility? 

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Finally, the Epic Funds team is optimistic that the Trump Administration’s policies related to taxes and regulatory reform will spur economic activity such as M&A and may be favorable to investment in energy, infrastructure, as well as defense and aerospace. More challenging will be separating signal from noise regarding the Administration’s pronouncements on its macroeconomic, trade, foreign, and immigration policies.   

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A Few Certainties and Important Takeaways

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As the private markets industry continues to transform and grow, it is likely to experience more upheaval in the form of vertical and horizontal transactions and partnerships across the asset management ecosystem. We are likely to be in the early innings of this transformation.  That said, the Epic Funds team identified three trends are likely to shape the future of private markets: 

• Private credit growth – A clear strategy winner in 2024, despite rising interest rates, private credit has proven its staying power and asset-liability matching advantage over banks. Its addressable market (e.g., including new areas such as asset-based lending) and long-term funding sources (e.g., insurance) should continue to grow. 

• Democratization of private markets – There is no turning back the growing demand retail and financial advisors have for private market products, which institutional investors have benefited from for decades. At the same time, institutions are increasingly taking advantage of the simplicity and flexibility offered by evergreen fund structures.
• Continuing industry consolidation – The recent fundraising slowdown highlights the flight towards mega funds with strong brands and that are part of large multi-strategy platforms. However, the industry remains highly vibrant, bifurcated, and characterized by low barriers to entry, which are a significant source of its dynamism. 

The Epic Funds team concluded this portion of the webinar by re-validating the cornerstone of its investment strategy: high-conviction manager selection. As we enter a more dynamic and competitive private market space, identifying managers and opportunities that truly add value and bring a differentiated risk profile will be even more critical to achieving competitive, uncorrelated returns for investors.

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The Epic Funds team wrapped up the webinar by sharing a few reading recommendations to kick off the new year:

• Michael: The Ministry of Time by Kaliane Bradley; Demon Copperhead by Barbara Kingsolver; The Economist 
• Jimmy: The Psychology of Money by Morgan Housel
• Alec: For Blood and Money by Nathan Vardi; Finding Ultra – Rich

If you would like a link to view the full webinar, please email ir@epic-funds.com

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