The Market’s Biggest Whales are Making Huge Changes: Total Portfolio Revolution | Steve Novakovic

Watch on YouTube ↗  |  January 13, 2026 at 14:00  |  1:07:57  |  Monetary Matters
Speakers
Steve Novakovic — Managing Director of Educational Programs at CAIA

Summary

Steve Novakovic, Managing Director of Educational Programs at CAIA, joins Max to discuss the shift from strategic asset allocation to the Total Portfolio Approach, including CalPERS' adoption and what it means for allocators and managers. The conversation covers private credit, private equity liquidity, secondaries, continuation funds, evergreen funds, and hedge fund fee/beta issues. Novakovic emphasizes education for retail investors entering alternatives and outlines upcoming CAIA/CAIA.nxt programs.

  • CalPERS' move to TPA is a major governance shift delegating allocation to investment staff.
  • TPA allocators can make larger tactical bets and compare opportunities across the whole portfolio.
  • Private credit flows continue, but LPs are becoming more selective and favoring experienced managers.
  • Private equity distributions improved modestly; secondaries and continuation funds provide liquidity.
  • Secondary markets are now mainstream, offering vintage diversification and GP relationship access.
  • Hedge funds face LP frustration over paying 2-and-20 for beta rather than alpha.
  • Evergreen funds expand retail access but carry underappreciated liquidity risks.
  • CAIA is launching education programs on portfolio implementation, TPA, infrastructure, and Islamic finance.
Ideas
Steve Novakovic Managing Director of Educational Programs at CAIA 23:58
Private credit flows continue; favor experienced managers.
Despite popular concerns about cracks and a potential credit cycle, allocators are still allocating to private credit and check-writing is not stopping; there is room for the strategy to grow in portfolios, but LPs are becoming more discerning and will favor managers with long credit-cycle track records and disciplined underwriting, especially given a possible credit cycle and first-time funds lacking distress experience.
BIZD HIGH
Steve Novakovic Managing Director of Educational Programs at CAIA 26:18
Private equity exit liquidity improving, but uneven.
Private equity distributions improved modestly in 2025, and there is optimism around the IPO market that could open the exit spigot; however, much of the apparent liquidity came through continuation funds, which may be left-pocket/right-pocket for existing LPs, and the denominator effect continues to pressure LPs to seek liquidity. This is a developing liquidity normalization setup rather than a clean return call.
PSP MED
Steve Novakovic Managing Director of Educational Programs at CAIA 32:53
Evergreen funds useful but liquidity not guaranteed.
Evergreen funds are a useful solution for retail/private wealth and smaller investors because they provide time diversification and easier access to private markets, and the speaker supports democratization; however, investors must understand that liquidity is not guaranteed, especially during market dislocations when many investors may redeem at once.
Evergreen private market funds MED
Steve Novakovic Managing Director of Educational Programs at CAIA 43:22
Continuation funds offer GP access.
Continuation vehicles can work in an LP's favor because existing LPs may not roll or may not take their full prorata, leaving allocation for new outside LPs; entering through a continuation fund can be a first relationship with a GP and a path to future fund investments. Standard secondary fund managers are a harder route to direct GP relationships.
Private equity continuation funds MED
Steve Novakovic Managing Director of Educational Programs at CAIA 45:56
Hedge funds AVOID: paying fees for beta.
Hedge funds are unattractive to sophisticated LPs in the current beta-driven market because much of their return has come from beta rather than alpha, while managers still charge 2-and-20; LPs do not want to pay incentive fees for market exposure, and alpha opportunities are constrained by low dispersion, asset growth, compressed spreads, and big beta rallies. Until alpha becomes more available, hedge funds will face a lack of love and fee frustration.
Hedge funds HIGH
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This Monetary Matters video, published January 13, 2026, features Steve Novakovic discussing BIZD, PSP, Evergreen private market funds, Private equity continuation funds, Hedge funds. 5 trade ideas extracted by AI with direction and confidence scoring.

Speakers: Steve Novakovic  · Tickers: BIZD, PSP, Evergreen private market funds, Private equity continuation funds, Hedge funds