Evergreen private credit fund strategies could be a “magnet” for retail capital going forward, a new report by KBRA has found.
KBRA examined President Donald Trump’s executive order to potentially ease regulatory barriers that have previously limited defined contribution retirement plans’ access to alternative investments, allowing more retail capital into these strategies.
It said that the democratisation of alternative investments seem “profoundly fair”, particularly given that retirement savers with access to a defined benefit (DB) pension plan see nearly one quarter of their portfolio expased to alternative assets.
Read more: Partners Group’s private credit evergreen fund hits €2bn
“Diversified exposure to private assets can be a net positive for savers with multi-decade investment horizons,” it said.
“KBRA notes an accelerating movement toward perpetual private asset fund strategies among its portfolio of rated vehicles and transactions. These strategies could also be a growing magnet for retail capital,” it added.
Going forward, it said it “envisions market benchmarks that can evolve into tradeable investment vehicles”.
Read more: Evergreen funds present issues around valuations and fee conflicts
It comes as the “retalisation” of evergreen private credit funds has raised concerns among experts as they say these strategies are more risky when retail investors are involved.
Bryan Astheimer, head of SEI’s Investment Managers business for EMEA, previously told Alternative Credit Investor that “offering a more liquid, perpetual version of a fund adds multiple layers of complexity across the entire firm, both in the back office and with the investor relations team – even more so if the fund will be offered to the non-institutional market.”
Read more: ‘Retailisation’ of evergreen funds raises concerns
