What are the safest sectors on the buyside for private capital (PE, PC, Special Sits, REPE, Infra, etc.) for an upcoming recession? Is it similar to banking where junior levels are relatively protected and the mid levels at risk? I imagine that its generslly far more insulated than the public side and IB due to locked up funds and longer time horizon. Would appreciate anyone else’s thoughts.
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RX just gets busier
A 1.5-2.5% annual fee backed by high quality counterparties that goes for 5+ years is a pretty high quality business model. Yeah, if rates stay high and we go into recession I wouldn't want to be raising a first time fund or at a seed shop, but job security shouldn't be a major concern for most folks.
From what I've heard from the people who left to buyside, no one really gets fired because there aren't that many people to begin with and the embarrassment of firing people and having them jump to your competitors is much worse.
There's only a risk if the next fund is drastically smaller than the current fund. Given how strong returns have been across the board over the last few years, I think it would take a while for the upcoming recession to dramatically impact fundraising.
Distressed and special sits are two that hold up/really shine during recessions
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