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David Miller, Global Head of Private Credit & Equity at Morgan Stanley Investment Management, joined Bloomberg Open Interest to discuss how a higher-for-longer cost of capital is reshaping private markets and creating opportunities for investors. While AI-related spending could slow in the near term, long-term need for compute remains intact and he emphasized the importance of diversification given the risk of concentrated exposure across the AI ecosystem. Beyond AI, David highlighted that future private equity returns may increasingly depend on underlying business growth and manager selectivity, and that. Flexible capital solutions are particularly attractive, especially for fundamentally strong but overleveraged businesses that need refinancing. He pointed to water infrastructure, electrification, maintenance and repair as compelling areas where investors can participate in long-term infrastructure spending without being overly dependent on the AI buildout.
Risk Considerations
Alternative investments are speculative and include a high degree of risk. Investors could lose all or a substantial amount of their investment. Alternative investments are suitable only for long-term investors willing to forego liquidity and put capital at risk for an indefinite period of time. Alternative investments are typically highly illiquid—there is no secondary market for private funds, and there may be restrictions on redemptions or assigning or otherwise transferring investments into private funds. Alternative investment funds often engage in leverage and other speculative practices that may increase volatility and risk of loss. Alternative investments typically have higher fees and expenses than other investment vehicles, and such fees and expenses will lower returns achieved by investors. Alternative investment funds are often unregulated, are not subject to the same regulatory requirements as mutual funds, and are not required to provide periodic pricing or valuation information to investors. The investment strategies described may not be suitable for your specific circumstances. Investing in companies in anticipation of a catalyst event, such as AI adoption, carries the risk that such catalysts may not occur, may be delayed, or that the market may react differently than expected. Companies focused on AI may have limited product lines, markets or financial resources, and their management and performance may be particularly impacted by events that adversely affect AI adoption, such as rapid changes in product technology cycles, product obsolescence, government regulation, cybersecurity concerns and competition.
This material is a general communication, which is not impartial and all information provided has been prepared solely for informational and educational purposes and does not constitute an offer or a recommendation to buy or sell any particular security or to adopt any specific investment strategy. The information herein has not been based on a consideration of any individual investor circumstances and is not investment advice, nor should it be construed in any way as tax, accounting, legal or regulatory advice. To that end, investors should seek independent legal and financial advice, including advice as to tax consequences, before making any investment decision.
The views and opinions and/or expressed are those of the presenters and as of the date of preparation of this video and are subject to change at any time without notice to market or economic conditions and may not necessarily come to pass.
