emerging
Illiquid Asset Diversification
Illiquid assets, such as private debt and infrastructure, are gaining importance as diversification tools.
Timeframe
near-term
Categories
Subcategories
Impact areas
Detailed Analysis
The report highlights the growing role of illiquid assets, particularly private debt and infrastructure, in portfolio diversification. This is driven by factors like new regulations in Europe aimed at increasing retail investor inflows and the search for yield in a low-interest-rate environment. "Illiquid assets could be an increasingly important tool for diversification as growth in private debt and infrastructure is accelerated by new rules in Europe to increase retail investor inflows."
Context Signals
ELTIF 2.0 regulation is making private markets more accessible to retail investors
Increased deal origination is expected in private markets
Investors are seeking yield in a low-interest-rate environment
Edge
The increased accessibility of private markets could democratize access to alternative investment strategies.
The growth of private debt and infrastructure could provide much-needed capital for long-term projects, particularly in areas like infrastructure development and the energy transition.
The illiquidity of these assets requires careful consideration of investor time horizons and liquidity needs.
