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In our inaugural Endowus Private Wealth Insights: HNW Investor Sentiment 2024 Report, we surveyed over 500 high-net-worth individuals in Hong Kong and Singapore. Top financial concerns at the time were diversification and enhancing returns in their portfolios.
Alternative investments address both these concerns by offering opportunities for alpha generation, illiquid premium, and leverage, while also providing diversification through access to a broader range of private companies that are not available in public markets.
We gathered the key takeaways from the second edition of the Endowus Private Markets & Alternatives Symposium 2025 in a two-parter series.
Private credit as an emerging core asset class
- The US$1.7 trillion private credit market continues to present growth opportunities. This can be partially attributed to that private credit yields are currently at a 10-year high, significantly above those in the public credit market, which continues to bolster the deal pipeline and stronger investor appetite.
- Historically, IPOs and M&A dealmaking activities have moved in tandem. And, top prediction for the M&A pipeline is CEO confidence. With the re-election of Donald Trump as the US president, CEOs in the US are more confident in the generation of business driven by policies. Opportunities will arise for private credit investors, should private equity general partners start deploying the uncalled capital. Private equity investors remain awash in dry powder which is estimated to stand at about US$2 trillion, according to MSCI.
What role does private credit play in portfolios?
- Recovery rates, crucial in the event of default, are often favourable due to protective contractual terms in private credit. Unlike public bonds, private credit managers can actively engage in restructuring a debtor's finances if needed, potentially mitigating losses or defaults. This hands-on approach, combined with the downside protection inherent in credit strategies, makes private credit a dependable, if “boring,” option.
Diversification benefits of private infrastructure
- Private infrastructure can provide inflation-hedging benefits compared to listed infrastructure because many private infrastructure contracts have inflation linkers. Listed infrastructure is more exposed to interest rate risk than private infrastructure.
- Along with listed infrastructure, REITs, which are popular among Singapore investors are more volatile – at a level closer to listed equities.
- Listed infrastructure funds tend to be weighted towards sectors like utilities and telecommunications, whereas private infrastructure can include assets like cell towers, which have high barriers to entry and are less sensitive to customer volume.
- General partners in the space typically look for assets that have high barriers to entry, contracted cash flow, positive value appreciation outlook, and strong counterparties. Preferably, these assets are already operational and generating cash flows
- Digital infrastructure, energy transition, and transportation and logistics are among the key themes that managers identify the long-term structural tailwinds in and offer opportunities for long-term compounding.
- GPs also emphasise the importance of entering infrastructure investments at the right pricing to achieve risk-adjusted returns and enjoy the structural trend. This requires careful due diligence and a focus on long-term value creation.
Building private wealth future with Endowus
Want to learn about Endowus Private Wealth and be present in our next industry-leading wealth events? Schedule a call with our client advisors.
Read more:
- Are evergreen funds really the future of private market investing?
- Private markets and hedge funds: The how and when of diversification
- Highlights from the Endowus WealthTech Conference 2024 (Part I)
- Key takeaways from the inaugural Endowus Private Markets & Hedge Funds Symposium
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