Investing Across Vintages to Weather Volatility

By: Logan Henderson | Published: 12/01/2022
Est. Reading Time:
2 minutes

“It’s important to stay consistently invested every single vintage year, which means you must think about asset allocation and make sure you know you’re not deploying too much capital today at the expense of tomorrow. Otherwise, you are making a huge bet on market timing.” – President, US-based Single Family Office

The number one driver of returns in private markets is manager selection, which is why we have a highly curated selection of rigorously vetted managers on our platform. As a result, the questions we get are often less about the quality of opportunities and more about where to invest, how much, and when.

Market conditions can impact private investments, and while volatility is not as severe in private markets as in public markets, private markets also go through cycles. Funds of a particular vintage may benefit from investing in a low-valuation environment (current market), while other vintages may have been deploying capital right before a crash (2019-2021 market). Attempting to forecast market conditions over a prolonged period is futile, and success would require exceptional foresight and timing.

As outlined in the quote above, the solution is consistently investing in a well-constructed portfolio diversified by manager, strategy, and vintage. When done well, this strategy becomes a form of dollar cost averaging for private investments that provide a stable return profile in all market conditions. 

Our Thematic Portfolios are built to provide members the ability to construct a scalable investing program with vintage-specific, multi-manager funds, albeit with a fee structure more than 50% below traditional fund of funds. 

Investing in multiple vintages of our Thematic Portfolios gives investors diversified sector and vintage exposure, access to leading private fund managers, and better economics.

-Logan Henderson, Founder and CEO

Worth a Read

Exploring Today’s Macroeconomic Parallels to 2001

Investors with a long-term view should heed the lessons of the 2000s. During the “lost decade” for stocks, investors who held on to their public market portfolios saw them lose value in real terms. Read more.

The Upside of Private Market Illiquidity

Private market assets are often seen as riskier because it can take years to cash out. In reality, this illiquidity is a feature, not a bug, which allows investors to hold over market cycles and earn higher returns. Read more.

A Final Thought

Campden Wealth recently released its comprehensive 2022 Family Office Report, a survey where the invested capital of the respondents averages $1 billion. Their top investment priorities are:

  1. Find new deals.
  2. Find alternative investments.
  3. Increase portfolio diversification.

While many investors may not have yet reached the family office classification of wealth, an estimated 13 million US households qualify as accredited investors. Gridline answers these three priorities so that more people can apply the investment strategies of the ultra-wealthy to their own portfolios.

Let us know what you think – please don’t hesitate to reach out.

-The Team at Gridline

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