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Nov 13, 2020

Where to Turn for Yield? A Look at Private Debt

Where to Turn for Yield? A Look at Private Debt


Private Debt: Strategies with flexible structures that offer the potential for both diversification and an attractive risk-return profile.


Investors are increasingly drawn to private debt strategies to seek yields, preserve capital, and maximize returns against a backdrop of high market valuations and compressed bond yields. This shift is driven by the unattractive risk-return profile of public market fixed-income, pushing institutional and high-net-worth investors towards private credit for its potential to offer better diversification and strong risk-adjusted returns.


Private debt has seen substantial growth. The asset class's appeal is bolstered by features such as short durations, collateralization, and credit insurance, which mitigate investment risks. As regulatory pressures have led banks to retreat from these markets, non-bank financial institutions and investors have found rich opportunities, making private debt a compelling inclusion in diversified investment portfolios.


Offering a variety of strategies from conservative to aggressive, private debt allows investors to tailor their financial exposure according to their risk tolerance and economic outlook. Strategies range from distressed and subordinated debt to niche areas like aviation and real estate finance, each providing different risk-return profiles. In a persistently low-interest-rate environment, private debt stands out as a viable option for investors aiming to enhance yields and diversify away from traditional equity and fixed income investments.


Access the entire article to explore more profound insights into the burgeoning opportunities within private debt strategies. Uncover how these alternatives can enhance your portfolio, offering both diversification and attractive returns. Dive into the various private debt strategies that cater to different risk preferences and investment goals.



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Table of Contents

  • Wary of Economic Jitters

    • Capital Preservation Strategies

    • Return-Maximizing Strategies

    • Opportunistic/Niche Strategies

  • Different Investors Looking for Diversification

    • Various Segments of Private Debt Offer a Range of Styles and Risk/Reward Profiles




Thanks to our Contributor


M360 Advisors


M360 Advisors invests in niche segments of private credit and manages a vertically integrated credit strategy that targets short duration commercial mortgage assets secured in first lien position by income-producing properties. The firm’s objective is to preserve invested capital and achieve attractive and sustainable risk-adjusted returns relative to traditional fixed income investments, while also providing reasonable liquidity to investors. M360 Advisors oversees the entire value chain internally – from sourcing loans all the way through to portfolio management.


By focusing exclusively on secured investments that are senior in the capital structure, we are able to deliver to our clients a rare combination of stable, uncorrelated returns with significant collateral protection.

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