Why Private Debt is a smart choice for your relationships

Misunderstandings and prejudices

Many advisors and managers are reluctant to advise their clients to invest in Private Debt. They fear loss of grip and revenue because these investments often fall outside their reports. Yet Private Debt offers numerous advantages that you as an advisor cannot ignore. In addition, from wealth advisors based on the many family, friends and fools loans, this asset class is viewed riskily. This is certainly not the case, provided the loan is properly selected, documented and managed.

Higher returns

Private Debt typically offers higher yields than traditional fixed-income investments, such as government bonds or investment-grade corporate bonds. This is because these loans are often made to companies that have difficulty accessing regular financing and are therefore willing to pay higher interest rates. We see a difference of about 2% to 3% here! This is especially attractive in the current low-interest-rate environment.

Risk distribution

Private Debt has a different risk profile than stocks or bonds. By including Private Debt in the portfolio, relationships can diversify their risk and thus reduce overall volatility. This contributes to a more stable long-term return. Diversification is and will continue to be an essential principle of risk management.

Stable revenues

One of the biggest advantages of Private Debt is the predictable and regular income stream in the form of interest income. This is especially useful for relationships seeking stable income, such as retirees or institutional investors.

Low correlation

Private Debt has a low correlation with equity markets and other public asset classes. This can help reduce the impact of market volatility on the overall portfolio. Less worry about the vagaries of the market, more focus on stable growth.

Active management and customization

Another advantage of Private Debt is the ability to be actively involved in the management of the investment. This provides opportunities for customization and direct control, which is attractive to relationships seeking greater involvement. Especially for relationships interested in impact investing and supporting economic development, Private Debt is an interesting option.   From the perspective of an asset advisor or manager, investing in Private Debt offers several advantages, including higher returns, diversification, stable income streams, low correlation with public markets and active management. These benefits help your relationships achieve their investment goals and better position their portfolios for different market conditions. As an advisor, it is important to do thorough research and consider the specific needs and risk tolerance of each relationship when recommending Private Debt investments.