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A ‘hat tip’ to William J. Kelly, CAIA, for his ‘hat tip’ to Ludovic Phalippou and their ‘hat tip’ to the recent speech by U.S. Securities and Exchange Commission Commissioner Caroline Crenshaw on the industry push to release the alternative investment hounds on your clients’ 401(k)s.
Phew… that was a mouthful.
I’d love to add my ranting to the mix, but these gentlemen have covered this topic so well already; I’ll spare you this month. I will just say that I share their concerns and welcome the broadening of the industry conversation.
Okay… But that doesn’t mean I don’t wince every time anyone refers to your clients as “retail.”
And, fwiw, at Third Wire, we also still refer to the industry as ‘Alternative Investment’ because we haven’t written off Hedge Fund strategies and diversification in favor of ‘Private Markets’, which seems to focus solely on Private Equity and Private Credit.
But, you know, let’s make sure your clients are protected first—then we can take up these other battles.
Best,
Dan
P.S. I’m trying to make our monthly newsletter more scanable/digestible, so you’ll see some changes. If we’re missing anything you’ve come to rely on, please let me know, and we’ll consider either adding it back or creating another way for you to get the information and insights you need every month.
Alternative Talking Points
We review the latest monthly reports and industry analyses across the private markets, boiling them down into a few easily digestible points to share with your clients. Contact us if you’d like more depth.
Hedge Funds: August hedge fund gains were broad with elevated dispersion across strategies.
What you’re hearing: “Tech stocks drove August gains.”
What we’re seeing: August hedge fund returns were broad‑based: long‑biased funds +2.88% while quant +1.09%, equity long/short +1.93%, macro +1.10% and multi‑strategy +1.23%; Asia‑Pacific long/short funds led with +4.07%
Bottom line: Gains were broad and led by Equity Hedge, with Event-Driven, Macro, and Relative Value strategies that were also positive amid elevated dispersion.
Source(s): HFR
Private Equity: A bump, not a revival—bigger checks and fewer closes.
What you’re hearing: “Deal-making is back to pre‑2022 levels.”
What we’re seeing: Global PE and VC deal value in August 2025 reached $58.22 bn—up ~10% YoY—while the number of deals declined to 827 from 927; year‑to‑date (Jan to Aug) volume was $479.76 bn across 8,327 deals vs $450.22 bn across 8,810 deals a year earlier.
Bottom line: Fewer closes and larger tickets, and exits are still thin; exits remain constrained, and continuation funds are a symptom, not a solution.
Source(s): S&PGlobal
Private Credit: Capital keeps flowing in, but…
What you’re hearing: “Private credit growth is unstoppable.”
What we’re seeing: Record fundraising, expansion into asset-backed and infrastructure finance, banks partnering with private-credit funds, new allocations from insurers, pensions, and individuals, and European managers racing to scale.
Bottom line: Growth is undeniable, but breadth and speed raise questions about discipline, pricing, and governance.
Source(s): Reuters, MayerBrown
Real Estate: Stress deepens, not resolves—vacancies up, prices down, refinancing pressure building.
What you’re hearing: “Lending risks are overblown, and Office headwinds are easing.”
What we’re seeing: U.S. national office vacancy reached 20.7% in Q2 2025; San Francisco’s vacancy was 27.7% and Downtown New York and Charlotte were around 23%; leasing has shifted to Class A buildings while logistics vacancies remain tight at 7.1%. Over $290 bn of office‑backed loans maturing by 2027 and more than 149 mn sq ft of office space earmarked for conversion to residential use.
Bottom line: Office distress remains severe; investors are seeking to rotate to more resilient sectors and assets. Refinancing risk is real; investors should prepare for further write‑downs, continued stress, and distressed opportunities.
Source(s): Reuters
Artificial Intelligence: Firms are talking about AI and experimenting, but most underestimate the challenges of being successful with it.
What you’re hearing: “95% of AI projects fail and generative AI is mostly smoke and mirrors.”
What we’re seeing: MIT’s “GenAI Divide: State of AI in Business 2025” found that about 95% of enterprise generative AI pilots produced no measurable impact on P&L; the study spanned ~300 deployments, 150 executive interviews, and 350 employee surveys. Core reasons: poor integration with workflows and data, vague success definitions, limited skills/talent, i.e., not the technology.
Bottom line: Deploying AI requires a cross-functional team, well-defined business problems, production-ready infrastructure, rigorous data and process integration, and realistic expectations… many execs seem to think you can just ask ChatGPT for a solution.
Source(s): MIT, Pure Math AI
Worth your time
Our monthly recommendation of books, articles, research, and announcements we found interesting, important, or just plain entertaining enough to share. Sometimes, we’ll have a lot—other times, not so much. The objective is to share things that might be useful or interesting for your clients, not filler.
➕ The GenAI Divide STATE OF AI IN BUSINESS 2025: MIT NANDA. Before you write AI off because a bunch of people misunderstood a study by MIT, you should read it. What we’re seeing and what our AI experts at Pure Math AI are telling us is that this is mostly a people, processes, and expectations issue—not a “the technology doesn’t work issue.” Sleep on AI at your own risk.
➕ Modeling Surgical Voice Outcomes with AI: Pure Math AI. We get it, we’re talking finance, not healthcare and AI. But imagine taking on a project for a clinic in Kyoto and being invited to a meeting to talk about AI, then being invited to observe a live procedure. The point? These guys aren’t talking about prompting, or ‘Productivity Hacks’ with ChatGPT, they’re talking about embedding with experts and applying data science and AI to solve real problems. And hopefully NOT passing out during the procedure;)
➕ The Autobahn and Private Markets Remarks at Better Markets Academic Advisory Board Annual Conference: SEC. Okay… we won’t add anything more to this than our friends who were mentioned in the intro letter. Thanks again to William J. Kelly, CAIA and Ludovic Phalippou for their commentary.
➕ I Learned the Hard Way: Private Investments Probably Don’t Belong in Your Portfolio: Daniel Wiener. Sure, we’re stacking the deck a little, but we live by the “Don’t just take our word for it” motto, and the drumbeat is growing steadily. Also, we don’t believe there isn’t a place for ‘Private Investments’ in client portfolios. We believe it should be a nuanced conversation based on your client’s needs and objectives… and we believe there are better options than what most of the private market “Pundits” and megafund managers are slinging to you and your clients these days.
➕ America’s top companies keep talking about AI — but can’t explain the upsides: Financial Times. It’s worth considering whether a lot of the discussion about AI in many large, publicly traded firms isn’t just AI-washing. A good place to look is whether or not they’ve put the right teams and processes in place to turn claims into measurable business outcomes. Look for evidence of dedicated AI teams with clear budgets, documented processes for moving pilots into production, and explicit metrics on cost savings, revenue impact, or productivity gains.
Disclosure:
This newsletter is for informational purposes only and does not constitute investment advice. All investments, including those in equity, debt, and alternative assets, carry certain risks, notably potential liquidity and transparency issues associated with many private investments. These risks should be considered in the context of an individual investor’s objectives and risk tolerance.
The views expressed are those of Third Wire as of the date of publication and are subject to change. The information has been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed.
Past performance is not indicative of future results. Investors are advised to consult with qualified financial, legal, or tax advisors before making any investment decisions. Third Wire does not accept liability for any loss or damage arising from the use of this newsletter.
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