The chart below depicts the average alpha metric trends for deals with horizontal slice risk retention (manager’s retention) and deals with vertical strip risk retention (third-party majority equity). Interestingly, deals with vertical strip risk retention consistently outperformed their counterparts. However, more recently, their median performance metrics have shown convergence. As of the latest reading on September 6, 2023, the median deal with horizontal slice risk retention slightly outperformed the median deal with vertical strip risk retention.
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