A huge majority of institutional investors, 90%, invested in the private debt asset class reported that they were satisfied with how their portfolios had performed in recent times, according to recent report from Preqin.
Strong returns are, of course, not the primary reason investors typically allocate to private debt, with the asset class’s ability to offer downside protection in times of market turbulence a key draw – 2019 may therefore prove a pivotal year for the asset class.
With over a third of investors believing a market correction will occur in the year up to early 2020, Preqin has already seen signs that investors are reassessing their portfolios, and the fundraising market has begun to record strategy shifts. While fundraising has been strong – exceeding $100billion for the fourth year running in 2018 – the prominence of direct lending is decreasing, and investors are seeing more opportunities in distressed debt and special situations strategies.
Over the longer term, private debt will remain an important, and potentially growing, part of investors’ portfolios, with a significant 95% of investors planning to maintain or increase their allocation to the asset class.
The report covers the global private debt market.
Please see full report here.