Private Debt: a nice fixed return and low risk

Private Debt: lowest volatility, good returns

Recently I attended a presentation by Blackstone in Brussels and they presented figures on returns and volatility over the past 15 years. This is a statistical measure of the value a property changes over a given period of time of different asset classes. What turns out? Private Debt has the lowest volatility with one of the best returns. One explanation for the difference in returns is the illiquidity premium. This is based on the idea that investors only invest in Private Debt if they are compensated for the lesser liquidity. In addition, the difference in returns comes about because the intermediate changes in the principal of the assets are zero. Of course, this depends on the quality of the loan: the debtor, the cash flow and the collateral. Investing in Private Debt is often seen as a conscious choice for stability and reduced volatility. In this regard, skill and experience of investment advisors are essential. A thorough risk analysis and selection of financing propositions is important to ensure solid returns.

A valuable option for investors

In conclusion, although the lesser marketability of Private Debt can be seen as a disadvantage, the illiquidity premium and stability of yields more than compensate for it. For investors who have a longer investment horizon and want to manage risk carefully, investing in Private Debt offers a valuable option.