December 2023 Private Performance

What a year 2023 turned out to be. All the big investment houses were calling for a soft landing/mild recession. And the public markets were like hold my beer. The S&P was up 24% for the year, with 2/3's of that return coming from the "Magnificent 7". The NASDAQ-100 was up 53%, which is fantastic. But the reality is even with these great returns, we just got back to the highs of January 2021 for the S&P and even farther back to November 2020 to match the last high for the NASDAQ-100. So if you were patient from the last highs, then parts of your portfolio are back to where they were then. If you tried to time the market or are sitting in cash/treasuries/CDs, there's pretty good chance you missed this jump up. The private investments we use in portfolios help limit the volatility of your portfolio and provide strong yields. This steadiness alone can prevent you from chasing performance and trying to time the market. 

Private Equity

The private equity funds, iDirect and BPIF are a key piece of this puzzle. We are still waiting on December's numbers, but we did get an update on iDirect since our last post. iDirect is now up 12.69% through November 2023. I expect December's numbers to be strong. BPIF reports on a quarterly basis, but was up 7.61% through the 3rd quarter 2023. If you compare these to mid cap index and the small cap index(very similar company sizes), mid cap was up 5% over the last year and small cap was flat or slightly negative. So the funds have outperformed even with out December for iDirect and the whole 4th quarter for BPIF. And that's with a 1/3 of the volatility. So I have been pleased with this part of the portfolio.

Private Real Estate

Not my favorite part of the portfolio this year was the private REITs. Both funds were down on the year, although less than 1% for both. I still have strong conviction in both of these funds. Right sectors, right locations, high occupancy rates. If you peel back the onion on these 2 funds. The underlying performance or the ability to generate cash flows was positive and growing for both funds. And then the dividends have stayed strong.

Private Credit

And then there is the superstars of the portfolio, private credit. How can I say in a year where the "Magnificent 7" broke out, that private credit is the superstar. In the last couple of years, where the AGG was down 13% in 2022 and was up 1% overall in 2023, but the price action was down -2.56% last year. Blackstone's and Carlyle's funds have been positive in 2022 and 2023 with less volatility than treasuries, much less the AGG. Both of these funds were up over 14% on the year. These funds have taken full advantage of the rise of interest rates, with the floating rate nature of their structure. Even when rates come down in the future, these funds have all kinds of tailwinds that should keep them important pieces of your portfolio.

1. https://www.breit.com/performance/
2. https://www.nuveen.com/gcreit/performance
3. https://www.bcred.com/performance/
4. https://www.carlyle.com/fund?_month=8&_year=2023
5. https://idirectpmfund.com/idirect-pm-fund/performance/#performance
6. https://bpif.com/portfolio-and-performance/default.aspx
7. Performance through December 31, 2023
8. Performance through December 31, 2023

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