The Mid 7

+ Niel Howe, Cliff Asness, Steve Cohen, Schroders, Apollo & More

Author

The Idea Farm
June 08, 2025

“Most people won't like your investment idea until after it doubles.”

— Ian Cassell

Research

KKR shares how recent events surrounding trade, geopolitics, and monetary policy have amplified their Regime Change thesis. They explain how these cross-currents affect growth, inflation, and valuations. They conclude: Traditional government bonds no longer serve as reliable shock absorbers for investor portfolios.

McKinsey shares an update on how private markets fared in 2024 and then expands on three current topics: the exit backlog in PE, the rise of alternative sources of capital, and the increasingly attractive world of secondaries and GP stakes. Some takeaways:

  • Sponsor-to-sponsor transactions as a share of total private-equity-backed exit count reached a ten-year high in 2024.

  • Private equity fundraising declined for the third consecutive year in 2024.

  • Private equity returns declined to roughly 3.8% in 2024.

  • In 2024, more than 18,000 companies had been under PE ownership for more than four years—more than 6x the number in 2005.

  • Total secondaries deal volume increased 45% year over year to $162 billion, making 2024 the highest year on record.

Schroders - Schroders Equity Lens (54 pages)

Schroders covers YTD asset performance, the return differential between Europe & the US, the opportunity in Japan and small-caps, and consensus earnings growth expectations.

Richard Bernstein Advisors - The Mag 7 becomes the Mid 7 (7 pages)

RBA says the Magnificent 7 is now an expensive group of stocks that is no longer unique, while other market segments, like International Quality, now offer superior growth prospects, higher dividend yields, and cheaper valuations.

Research Affiliates demonstrates how trend-following can be a tightrope act: dialing up the strategy’s prized positive skew for crash-era payoffs invariably chips away at its Sharpe ratio, so allocators must decide how much smooth return they are willing to sacrifice for tail-risk insurance.

Bonus Content

Louis-Vincent Gave walks through eight trends that he believes are likely to reshape global markets. Link

Apollo published 120 slides on the state of the US housing market. Link

Steve Cohen talks about the investment landscape today, the importance of adapting to changing market conditions, and life beyond finance (18 minutes). Link

The annual S&P Dow Jones Indices U.S. Persistence Score helps compare the performance of active funds versus the performance of their benchmarks. None of the top-quartile large-cap funds from 2022 maintained their position in the top quartile for the subsequent two years. Link

Podcasts

5/9/2025 - 90 minutes

AQR’s Cliff Asness covers what makes a successful long-term strategy, how he thinks about building portfolios, and why most investors misjudge both volatility and leverage.

5/9/2025 - 102 minutes

Howe explores the defining characteristics of a Fourth Turning, why America and the rest of the world may already be deep into one, and the possibility of a confrontation with China.

5/21/2025 - 63 minutes

The guests cover insights from the Global Investment Returns Yearbook, discussing how the US has thrived and what that means for future investment strategies.

What Else Is Happening