Wealth Outlook 2024 - Slow then grow

73 Wealth Outlook 2024 | Opportunistic Investing with and in unregulated financial companies Source: Preqin and HFRI as of December 31, 2022 FIGURE 1 Growth in alternatives AUM 2000-2022 Alternatives Assets Under Management Breakdown (USD tn) 18 12 6 0 Hedge funds Real estate Infrastructure Private debt Natural resources Private equity 2020 2015 2010 2005 2000 Three ways to invest in private credit We see several ways for qualified investors to take advantage of the continued growth of US and European private credit and other non-bank lending. The most direct way is to invest in a private credit fund. Already, there is a growing imbalance between the demand for private capital and the capacity of the private credit system to provide it. Private capital providers are able to charge a premium in this environment and pass that on to their investors in the form of higher yields. For investors with the liquidity to accommodate extended lockup periods, these vehicles may deliver a potentially attractive source of yield today. As of early November, direct lending was generating a premium of 276 basis points over comparable-risk leveraged loan funds and a 493 basis point premium over high-yield corporate bonds. ⁴ ⁴ Cliffwater 2023 Q2 Report on US Direct Lending. Represents the premium of the takeout yield for the Cliffwater Direct Lending Index relative to the Bloomberg High Yield Index yield to maturity and the Morningstar LSTA US Leveraged Loan 100 Index yield to maturity. Another option that investors often don’t consider is to buy stock in the large publicly traded private