According to Invesco’s 2023 Investment Outlook, the valuations environment remains neutral despite ongoing volatile market conditions.
Assessing the opportunities in alternatives in coming months, Invesco highlights that private market valuation conditions remain neutral, based on strong but weakening fundamentals.
Despite persistent high inflation rates, increasing interest rates, broadening credit spreads and substantial equity market volatility, valuations are roughly in line with history.
While the private equity market environment is presented as unattractive in the report, it also suggests that if the markets move into recovery with high but falling credit spreads, an outperformance of riskier and cyclically orientated private assets is anticipated.
This outlook contradicts predictions of a decrease in valuation figures from the Rede Liquidity Index.
The latest International Private Equity and Venture Capital Valuation guidelines were published at the end of last year to help address the challenging macroeconomic environment.