Investors tempted by nascent asset class private debt

Investors are looking to increase their allocation to private debt as 60% believe the market will grow, research shows.

Fund services provider Elian surveyed 88 alternative investment professionals and found that 41% of investors are looking to increase their allocation to private debt in the next 12 months. Within that group, 15% said that they would increase their allocation significantly, while 29% said it would remain the same.

The research also found that 73% of investors said their investments had met or exceeded expectations, while only 13% reported investments falling short of their expectations.

Private debt, seen as a diversification tool, is viewed as providing better downside protection than bonds while also having equity-like returns and only 7% think the market will shrink over the next year.

Charles Le Cornu, head of private equity at Elian, said that as institutional investors continue to face low yields from the fixed income space, there has been a significant increase in demand for forms of alternative lending, including private debt despite it being in its “infancy”.

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