This week in charts
Trading composition
10-yr U.S. Government bond returns
S&P 500 Index valuations
Labour intensive sectors
U.S. Civilian labour force
U.S. Labour force participation
Foreign sales exposed to retaliatory tariffs
Government investment by region
MSCI World Cyclicals vs. MSCI World Defensives
Fund flows - U.S. large cap vs. U.S. small cap
Private equity firms flip assets to themselves in record numbers
Buyout groups used so-called continuation funds — in which a private equity group sells assets from one of the funds they manage to a fresher fund also managed by the firm — to exit $41bn of investments in the first six months of 2025, according to a report by investment bank Jefferies.
That was equal to a record 19 per cent of all sales by the industry, and 60 per cent higher than a year ago.
Private equity groups sit on more than $3tn in unsold deals and are nearing four consecutive years in which they have returned only about half the cash investors traditionally expect.
Continuation funds give investors the choice to roll over their investment or to cash out. For their private equity sponsors, they allow the firm to keep portfolio companies beyond the typical 10-year life of a fund, and to crystallise performance fees on the assets sold while collecting a steady stream of management fees from the new fund buying the investments.
In the first half of the year, PE groups such as Vista Equity Partners, New Mountain Capital and Inflexion used multibillion dollar continuation funds to sell down some of their largest investments.
Vista raised a record $5.6bn continuation fund to sell a large existing stake in IT firm Cloud Software Group to a newer fund it manages, while Inflexion sold stakes in four deals, including industrial company Aspen Pumps and Rosemont Pharmaceuticals, a UK pharma business, for £2.3bn. Both deals locked in large gains for investors choosing to sell their stakes.
The report from Jefferies found that the secondary market, where both buyout firms and their institutional investors can trade stakes in existing assets, exploded in the first half of this year.
More than $100bn of sales took place, an increase of almost 50 per cent from the same period last year. Slightly more than half of that came from fund investors — known as limited partners — selling their holdings.
Continuation funds have drawn concern from some investors as a tactic for recycling capital, even as their popularity has surged, with an increasing number of institutional investors opting out of them.
But a recent report from Bain & Co, considered an authority in the industry, still showed that almost two-thirds of investors in private equity funds would prefer groups sell down investments the conventional way through sales to companies or initial public offerings. Just one-sixth of investors said they preferred continuation funds.
This week’s fun finds
Investment intern, Zane Balkissoon, treated the team to Japanese rice bowls and cake from a couple of his favourite local spots. It was comforting, packed with flavour and the perfect choice to kick off the long-weekend. Definitely a crowd pleaser. Thanks for all your hard work Zane, job well done!
Dennis Lehtonen Documents a Pair of Immense Icebergs Paying a Visit to a Small Greenland Village
From rocky outcrops overlooking modest, brightly painted houses, photographer Dennis Lehtonen captures an astonishing nordic phenomenon. Innaarsuit, Greenland, which sits more than 430 miles north of the Arctic Circle, sets the stage for a series of images highlighting dramatic visitors to the area’s waterways.
