At NAOS Asset Management Limited (NAOS), when we review where some of the world’s most prominent capital allocators such as Oaktree Capital, Berkshire Hathaway and even the Australian Future Fund are investing, a notable trend has emerged in how they have evolved their investment process to have a greater focus on, and allocation to private investments. What makes this even more notable is that these investment firms would be considered some of the most measured and risk aware given their longevity and strong long-term risk adjusted returns.
Understanding why these trends have evolved starts with understanding the benefits that come from investing in private businesses as well as having a deep and objective understanding of the associated risks. Many investors have historically not considered investing in private businesses due to the perceived risks and therefore may be missing out on the potential for strong risk adjusted returns over the long term from this asset class.
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