Dive into our latest report on Private Debt - and why now is a compelling moment for the asset class as a source of stable income and as a diversifier in portfolios.
Dive into our latest report on Private Debt - and why now is a compelling moment for the asset class as a source of stable income and as a diversifier in portfolios.
With global markets under pressure from geopolitical conflicts, U.S. tariffs, recession fears, and persistent public market volatility, investors are facing one of the most uncertain environments in recent years. In this climate, Private Debt stands out as a resilient and strategic solution– providing consistent, compounding, contractual income. While typically less liquid than public fixed income, this illiquidity can be a key source of enhanced yield and downside protection.
Short-term dislocation creates entry opportunities in Private Debt
Against the backdrop of global investor uncertainty, market dislocations are opening the door to attractive entry points for selective capital deployment by Private Debt investors:
Volatility drives debt repricing: The U.S. tariff escalation has caused repricing in debt markets. These dynamics allow investors to access quality assets at better terms.
Private lenders bridge the funding gap: As banks retreat due to regulatory/macro pressures, Private Debt funds become primary lenders to the middle market, enabling favourable terms.
Floating-rate loans mitigate inflation risks: Most Private Debt structures are floating-rate, allowing interest to rise with base rates. This provides investors with a built-in inflation hedge.
While dislocation is creating opportunities for private lenders, investors should remain mindful of near-term risks such as slowing growth, rising input costs, and market illiquidity. Yet these very dynamics also set the stage for structural, medium- to long-term advantages of Private Debt.
Medium- to long-term fundamentals reinforce case for Private Debt
Long-term characteristics make Private Debt a resilient and essential portfolio component:
High, contractual cash income beyond public debt
Growing market opportunity given structural tailwinds from bank retrenchment
Crisis resilience and portfolio diversification
1. High, contractual cash income beyond public debt
Historically (between 2001 and 2021), Private Debt has consistently delivered higher total returns and stronger cash income than public debt, while maintaining lower volatility and drawdown risk. These dynamics underscore its value as a defensive, income-generating asset class for investors across the globe.
2, Growing market opportunity given structural tailwinds
Private Debt has grown significantly in the last two decades compared to other (public) debt assets. This shift has been accelerated as traditional banks reduce their lending exposure, particularly towards middle-market borrowers due to banks’ rising capital requirements, protectionist policies, and growing exposure to geopolitical risks.
3. Crisis resilience and portfolio diversification
Private Debt has historically had a stabilizing impact on portfolios. The asset class has been significantly less affected by market turbulence and downturns, as seen during the 2008 global financial crisis as well as during the (post-)covid period in 2020/2022. Private Debt is consequently often used by investors as a tool to ensure downside protection and increase portfolio diversification.
In short: Why is now the right time to invest in Private Debt?
Income stability
Private Debt offers predictable, stable cash flows at a time when public markets are fluctuating.
Lending opportunities in liquidity crunch
As banks retreat from certain lending activities, private lenders fill the gap (strong pricing power).
Defensive structure and seniority
Private Debt often entails conservative structures (senior secured), offering protection in downturns
Attractive floating-rate structures
As rates decline, Private Debt compels given floating-rate structures (continued strong yields).
Want to know more about Private Debt or iAccess Partners?
Private Real Estate has grown over the last decade into a multi-trillion-euro asset class
Private Real Estate has grown significantly in popularity since its emergence in the 1990s and has since become an institutionalized asset class valued at approximately €3.7 trillion.
Why Private Real Estate?
Attractive risk-adjusted returns
Stable returns beyond public real estate: Private Real Estate has historically outperformed its public counterpart, enabled by rigorous value creation and asset selection strategies
Low volatility and steady appreciation: Private Real Estate is a traditionally stable asset class, enabled by appreciating assets with long-term contracts
Fit to macro environment
Value-adding impact on communities: Investments in Private Real Estate have a sustainable impact on regional and global communities via development of housing and offices
Growing real estate market: Growth fueled by macroeconomic trends such as population increase, continued urbanization, and digitalization
Downside protection
Reduced risk of loss: Private Real Estate funds face low downside risks due to a rigorous asset selection processes and appreciating, tangible underlying assets
Inflation hedge and low stock/bond correlation: Private Real Estate value is linked to inflation rates, reducing inflation risk, while exhibiting low correlation with stocks and bonds
Return drivers of the four main Private Real Estate strategies
Within Private Real Estate, there are four primary investment strategies that offer investors different risk-return profiles and differ when it comes to the two main return drivers: (i)capital appreciation and (ii) income.
