Private debt investing

A specialized asset class designed for a higher yield

Many investors complement their traditional fixed-income portfolio with investments in the private debt sector.

High quality private credit funds can help you capitalize on the potential for higher yields. This specialized asset class can also reduce your exposure to fluctuating interest rates. However, the trade-off is that you may sacrifice some liquidity with your investments due to the terms of the funds, and the lending they provide. 

Private lenders seize opportunities.

Increased regulatory pressures on banks opened the door to other private lenders, who stepped in to seize opportunities where the banks do not.

As an investor, you can buy into funds that may supply loans against business equity, property, corporate private debt, consumer, commercial and industrial assets, and more. The typical average duration of the loans are one to three years, but they can be as short as a few months. Your investment protection is maximized by the terms of the loans, which are often covenant heavy and fully customized for each recipient.

While private debt strategies have provided substantially higher yields compared to fixed-income indexes, it is important to keep in mind the inherent risks of loans. The benefits of holding investments in these funds are the substantial diligence and specialized experience the managers tend to bring to the table.