In its recent analysis, Invesco sheds light on the landscape of alternative assets, particularly focusing on private credit and real estate. The firm is optimistic about the prospects in the private credit sector, anticipating an enhanced environment propelled by a robust economy, diminishing inflation rates, anticipated rate cuts, and forthcoming liquidity events in private equity.
According to Invesco, investors in private credit are poised to benefit from attractive yields without compromising on credit quality. It projects overall yields to linger between 11 and 12% throughout the year, presenting a compelling opportunity for private credit investors seeking strong returns.
Delving deeper, Invesco identifies potential in distressed debt and special situations, particularly highlighting the possibility of providing funds to ‘good companies’ grappling with weakened balance sheets. The firm points out that a higher rate environment has adversely affected smaller companies, constraining their liquidity despite operational prowess. This scenario, Invesco suggests, presents an opportune moment for investors to capitalize on appealing valuations.
Shifting focus to real assets, Invesco observes that fundamentals generally remain robust, notwithstanding lower transaction volumes and the stresses imposed by an elevated-rate setting. The firm expresses a particularly optimistic stance on real estate, citing an ameliorating monetary backdrop expected to bolster transaction activities. Notably, income fundamentals have exhibited resilience across various real estate sectors, except for offices experiencing challenges and pockets of overbuilding in select markets. The recent supportive economic data hints at a ‘soft landing’ for the economy, aligning positively with real estate projections.
Finsum: Invesco’s insights underscore a positive outlook for alternative assets, with a spotlight on the promising trajectory of real estate and private credit given the optimistic economic forecast for 2024.
- alternative
- real estate
- private credit
- macro
- real assets
- yields
