This week’s video segment with Reuters Insider was about distressed debt investing, and the disconnect between increased fundraising and the expectation of declining returns (assuming continued economic strengthening).
I didn’t get a chance to explicitly address the latter, but would say that LPs too often are blinded by recent returns at the expense of objective prognostication. Think about all those VC funds raised in 2001. Or mega-buyout funds in 2008. Or the Red Sox paying nearly $8 million per year for Mike Cameron.
Erin argued last week that part of current distressed fundraising success related to LP allocation issues, and I agree that plays a role. Anyway, here’s the vid, filmed just down the hall from my home office: