Alt Investments
EXCLUSIVE: Family Offices Smile On Private Debt – Survey
The survey taps into the idea that investors, including family offices, are keen on areas such as private credit because of the presumed added returns paid to compensate for lower levels of liquidity.
A survey by Aeon Investments of family offices controlling a total of $98.4 billion of assets finds that they are increasingly turning to illiquid assets, including private debt. They see these areas as offering shelter amidst market volatility and rising interest rates and inflation.
Some 90 per cent of those surveyed said they expect increased demand from investors for illiquid assets over the next two years. Around 12 per cent predict that demand will increase dramatically.
Aeon Investments commissioned the market research company
Pureprofile to interview 100 senior investment managers and
wealth managers working for family offices in the UK, the US,
Switzerland, Germany, Italy and the Nordic region during November
2022.
The findings chime with a general flow of commentary and data
that this news service has written about over how high net
worth and ultra-HNW individuals are increasingly keen on areas
such as private equity, debt, infrastructure and real estate
because conventional government bonds and listed equities have
had their yields hit by a decade of low/negative interest rates.
Even though central banks are starting to hike rates, the charms
of illiquid assets, so their backers say, remain. Questions
arise, however, whether some forms of debt investment might
suffer if central bank monetary policy is squeezed significantly
further.
The Aeon report said that family offices also highlighted how
private debt offers new investment opportunities, access to
certain ESG assets, and a way of spreading risk.
Almost all (99 per cent) questioned pointed to the combination of
attractive yields and structural protections such as debt
covenants and credit enhancement as offering a high degree of
safety, the Aeon survey found. More than a quarter (26 per cent)
of survey respondents said they expect improved dramatic
regulation for private debt over the next two years while 52 per
cent expect slight improvements in regulation.
