Given the persistently low interest rates and narrow credit spreads over much of the past decade, many investment managers have significantly increased their allocations to alternative investments and real assets. These products, while offering potential for higher returns, are notoriously difficult to evaluate, even for sophisticated private equity firms. Often, these firms lack a comprehensive portfolio view across multiple deal teams. The illiquid nature of these investments, particularly during periods of financial stress, makes it critical to understand their cash flows and valuations not only in stable markets but also during crises.
To address these challenges, Straterix has partnered with Edelscourt to provide a robust framework for evaluating these complex assets. This collaboration enables us to:
- Identify Market Drivers: Edelscourt specializes in pinpointing the key risk and return drivers for each private asset investment. This is crucial for understanding the unique factors that influence the performance of these assets.
- Generate Full-Range Scenarios: Straterix leverages these identified risk drivers, along with additional variables affecting public assets, loans, and structured products, to create comprehensive scenarios. These scenarios cover a wide range of potential market conditions, including unprecedented ones driven by feasible combinations of shock events, their ripple effects, and implicitly changing correlations.
- Project Asset Behavior: Together, Straterix and Edelscourt project the behavior of private and public assets, including their associated liabilities where applicable. This includes modeling cash flows and valuations across all generated scenarios, ensuring that investment managers have a clear view of potential outcomes under various market conditions.
This integrated approach provides a more complete and realistic assessment of investment portfolios, enabling managers to make informed decisions that account for both stable and crisis conditions.
To learn more reach out directly to Straterix or Edelscourt!