Overall private market performance via the Forge Private Market Index
Revisit a key moment of our Q3 Forge Investment Outlook webinar where Andrew Alden, Senior Diretor of Quantitative Analytics explains how to use the Forge Private Market Index to better understand the overall performance of the private market. Learn more about The Great Reset and get the full Forge Investment Outlook report.
Perhaps the most direct place I like to go to understand performance in this space is the Forge Private Market Index. It was created to directly address the lack of good benchmarks in the space and also to give people a place to look to see how performance in the secondary market is moving.
Historically, there has been a lack of benchmarks. I've seen people using public equity benchmarks, such as Nasdaq 100 or the Russell 2000. I've also seen people using private equities manager returns provided by people like Cambridge to proxy performance in this space. But both of those are materially different and do not show the performance of private secondary market trading activities.
And the Forge Private Market Index exclusively uses private market price data, and reflects the price movement of 75 of the most liquid names in the space.
As such, the Forge Private Market Index is always a place I go to first to understand the performance on our platform and in this space. To answer your initial question, the Forge Private Market Index is down -17% for the year through June 30th. And this has been in contrast with the public markets, which as you well know are up about 40% for the year through June. And that's led by mega cap tech stocks. Here, this chart shows the full history of the Index.
So, you can see how the Private Market Index has performed since the Index inception at the start of 2019. You can also contrast it with some commonly used public market indices. You can see the dramatic outperformance of the Private Market Index in the 2019 to 2021 period. And then also the bear market that began in 2022. One thing I also find very interesting about this chart is the apparent lead/lag relationship between public equity market and this space.
What we see in the 2020 and 2021 period is the strong rally started first in the public markets before dramatically taking off a quarter or two later in the private market. Meanwhile, at the tail end of 2021, the drawdown seemed to hit the public and private markets at nearly the same time. So, what I'm watching most intently now is this performance dispersion between the public and private markets in 2023. Year to date, the public market is leading dramatically, and it'll be really interesting to see if the private market will follow.
Related to the Index, another chart that I like looking at is this one.
Showing the performance of the underlying Forge Private Market Index constituents in green, gray, and red bars overlaid with the transparent bar chart of the Nasdaq 100 ETF quarterly performance represented by triple Q. Green shows the percentage of Index companies that had positive performance in each quarter, while red reflects the percentage of Index companies with negative performance in the quarter. And gray is flat.
To me, this chart helps us better get under the hood of the Index and see if they're potentially any indications of a turning point in the market. As you can see, when NASDAQ was posting a lot of positive quarters, that sentiment does appear to have permeated private markets, leading to a higher percentage of companies trading up in our space. Turning to recent months, you can see that we're getting an increasing share of companies with positive returns, even though the aggregate index performance has yet to turn positive this year.
So, this is one place I look to perhaps get an early indication of turning points in the market.
Disclaimers
About Forge
Forge Global Holdings, Inc. (together with its subsidiaries, “Forge”) is a leading provider of marketplace infrastructure, data services and technology solutions for private market participants.
Legal Notices and Disclosures
© 2024 Forge Global, Inc. and its affiliates. All rights reserved. Investing in private company securities is not suitable for all investors, is highly speculative, is high risk, and you should be prepared to withstand a total loss of your investment. Private company securities are highly illiquid and there is no guarantee that a market will develop for such securities. Each investment carries its own risks, and you should conduct your own due diligence regarding the investment, including obtaining independent professional advice.
Past performance Is not indicative of future results.
This is not a recommendation, offer, solicitation of an offer, or advice to buy or sell securities by Forge Securities LLC (“FSEC”) or any of its affiliates, nor an offer of brokerage services in any jurisdiction where FSEC is not permitted. Registered representatives of FSEC do not (1) advise any party on the merits of a particular transaction; (2) assist in the determination of fair value of any security; or (3) provide legal, tax, or transactional advisory services. Securities and investments are offered to customers of FSEC, member FINRA & SIPC. See Forge’s Disclosure Library (Disclaimers & Disclosures and Form CRS) for additional disclosures.
The information contained herein is based on currently available information, and Forge undertakes no obligation to update any of such information or to reflect new information or the occurrence of unanticipated events, except as required by law. While Forge believes such information forms a reasonable basis for the contents of this Investment Outlook, such information may be limited or incomplete, and this content should not be read to indicate that Forge has conducted an exhaustive inquiry into, or review of, all potentially available relevant information.
This Investment Outlook contains trademarks, service marks, trade names and copyrights of Forge and may contain those of other companies, which are the property of their respective owners. The use or display of third parties’ trademarks, service marks, trade names or products is not intended to, and does not imply, a relationship with Forge or any of its respective affiliates, or an endorsement or sponsorship by or of Forge or such affiliates. Solely for convenience, some of the trademarks, service marks, trade names and copyrights referred to in this Investment Outlook may be listed without the TM, SM, (c) or (R) symbols, but Forge will assert, to the fullest extent under applicable law, the right of the applicable owners, if any, to these trademarks, service marks, trade names and copyrights.
The performance of the Forge Private Market Index with respect to the growth of $10,000 shown herein does not represent the performance of any actual investment, as you cannot invest in the index, but rather reflects the hypothetical growth of a $10,000 investment in a basket of securities based on the index. Additionally, the chart assumes reinvestment of dividends and capital gains in the constituent securities but does not reflect any fees or commissions that may be incurred in purchasing or selling such securities, which would lower the figures shown if included. Further, $10,000 may not be a sufficient amount to invest simultaneously in all securities contributing to the performance shown, which would further prevent an investor from matching the performance shown. The performance shown represents past performance, and past performance is not indicative of future results.
The Forge Private Market Index is calculated and disseminated by Forge Data LLC ("Forge Data") and is a mark of Forge Data. The Forge Private Market Index is solely for informational purposes and is based upon information from sources believed to be reliable. It is not possible to invest in the Forge Private Market Index, and Forge Data makes no assurance that any investment products based on or underlying the Forge Private Market Index will accurately track index performance or provide positive investment returns. Forge Data is not an investment adviser and makes no representation regarding the advisability of investing in any asset classes or investment vehicles. Private company securities are highly illiquid, and the Forge Private Market Index may rely on a very limited number of trade and/or indication of interest inputs in its calculation. Please see Forge Private Market Index Disclaimers & Acknowledgments for other important disclaimers, disclosures and restrictions related to the Forge Private Market Index that you acknowledge by downloading this content and to which you are subject. References to "Returns" in the context of the Forge Private Market Index Price are hypothetical in nature. The percentages displayed indicate the per-share change in percentage in the Forge Private Market Index Price of the applicable constituent, rounded to the nearest tenth of a percent unless otherwise indicated.