Wealth managers diversify their private debt portfolios by considering the following strategies:
- Private debt funds of funds: Wealth managers can invest in private debt funds of funds, which invest in a variety of third-party debt funds depending on the fund strategy. This provides greater portfolio diversification for investors 1 .
- Tilting the portfolio towards opportunities or the target allocation: Wealth managers can diversify their private debt portfolios by tilting the portfolio towards opportunities or the target allocation. This is the best way to access top managers whilst diversifying across deals 2 .
- Choosing a diversified private debt portfolio: Wealth managers can choose a diversified private debt portfolio that includes a variety of private debt strategies. This can help to minimize risk and maximize returns 3 .
- Investing in emerging markets: Wealth managers can diversify their private debt portfolios by investing in private debt in emerging markets. Private debt in emerging markets is a powerful asset class to add resilience, impact, and diversification to an investment portfolio 4 .
- Choosing a private debt strategy aligned with investment objectives: Wealth managers should choose a private debt strategy that aligns with their investment objectives and existing holdings. Private debt is an extremely broad and versatile asset class, offering a variety of approaches. Wealth managers should know which styles and strategies will best suit their needs 5 .
Overall, wealth managers diversify their private debt portfolios by investing in private debt funds of funds, tilting the portfolio towards opportunities or the target allocation, choosing a diversified private debt portfolio, investing in emerging markets, and choosing a private debt strategy aligned with their investment objectives. By diversifying their private debt portfolios, wealth managers can minimize risk and maximize returns.