Wealth managers face several common challenges when evaluating the experience of private debt investment teams. Here are some of the key challenges:
- Lack of information: Private debt remains a very relationship-driven investment, and there is often a lack of information available to wealth managers. With a smaller pool of lenders available, fewer people are aware of the investment opportunities 1 .
- Difficulty in measuring performance: Private debt investments can be difficult to measure, and it can be challenging to compare the performance of different private debt investment teams 2 .
- Limited track record: Private debt is a relatively new asset class, and many private debt investment teams have limited track records 2 .
- Complexity of the investment: Private debt investments can be complex, and it can be challenging to understand the risks and rewards associated with different types of private debt investments 3 .
- Manager selection: Wealth managers need to select the right private debt investment team to manage their investments. This requires a thorough understanding of the investment team’s experience, investment strategy, and risk management approach 2 .
Overall, wealth managers face challenges in evaluating the experience of private debt investment teams due to the lack of information available, difficulty in measuring performance, limited track record, complexity of the investment, and the need to select the right investment team. By carefully evaluating these challenges, wealth managers can make informed decisions about private debt investments that align with their investment objectives and risk tolerance.