Nearly half of global institutional investors plan to increase their exposure to private credit over the next two years, while more than 80 per cent expect to raise their allocations to alternatives overall, according to new research.
A survey by private markets manager Nuveen of 800 institutional investors worldwide found that 43 per cent intend to increase their exposure to private credit, while 39 per cent plan to maintain current levels. Just seven per cent said they expect to reduce allocations.
The study also found that 46 per cent of respondents view diversification within alternative credit portfolios as a top priority over the next five years, as investors look beyond traditional direct lending strategies.
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Among those planning to increase allocations to private fixed income, 44 per cent said they would target private investment-grade corporate credit and private investment-grade infrastructure debt. Private asset-backed securities and private real estate debt were also highlighted as key areas of interest.
In terms of preferred investment vehicles for new private credit exposure, custom mandates and institutional separate accounts were the most popular options, cited by 60 per cent of respondents, followed by closed-ended funds at 54 per cent.
Co-investment arrangements and open-ended institutional evergreen funds were selected by 43 per cent and 39 per cent of investors respectively.
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Overall, Nuveen’s sixth annual EQuilibrium Global Institutional Investor Survey found that 81 per cent of investors plan to increase their private markets allocations over the next five years.
Elsewhere in private markets, 43 per cent of investors said they intend to increase exposure to infrastructure, while 42 per cent plan to raise allocations to private equity.
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