Despite strong YTD returns, investors see challenges ahead
See why investors seeking stable income may need to look outside of traditional fixed income markets to find it in today’s environment.
October 11, 2019 | 2 minute read
According to this week’s survey of investor sentiment, just 20% of investors are bullish on the equity markets compared to a historical average of 38%. Alternatively, 44% of investors have a bearish outlook compared to an average of 31%.1
Retail investors are not alone in their views on potential challenges ahead for generating returns. According to a Preqin survey of institutional investors, nearly 7 in 10 investors see high valuations as a challenge to generating returns this year.2 Other significant issues include continued equity volatility and geopolitical concerns.2
Despite the strong returns traditional stock and bond markets have generated this year, investors face a significant set of challenges going forward. These are not only limited to those noted in the chart but also include slowing economic and earnings growth and wilting business sentiment.
In response to these challenges, many institutional investors intend to increase their allocations to alternative investments in 2019, including private debt, real estate, hedge funds and private equity. Preqin projects alternative assets under management will increase to $14 trillion by 2023 from $9.5 trillion as of 2018.2
Private credit has increasingly become the preferred source of financing for PE sponsors, with direct lending volume jumping 60% over last year’s level.
