The dilemmas facing Garfield's "Barbell"
The Blind Squirrel's Monday Morning Notes, April 24th 2023.
As our readership grows, some old friends have been getting in touch out of the blue
One such friend, Garfield (not his real name), is a successful venture capitalist. Like so many folk in his position, he has a lot of his net worth tied up in his fund and has given limited thought to his other liquidity until recently.
Similar to a lot of PE/VC types I know, Garfield takes a “bar bell” approach to his investments, which reside at the 2 extremes of the risk spectrum (alternatives and cash).
In a world where you can capture 4% interest at the front end of the yield curve and where inflation erodes the spending power of your cash by almost 10% per annum in certain parts of Europe, making the liquid end of your “barbell” do some heavy lifting is not longer, in our view, an elective discipline.
Garfield wanted some help and we ran through some (high yield) ideas with him. We also think he should think about hedging his exposure to long duration VC holdings and suggest Simplify’s PFIX…