No investor is immune from the economic cycle, and many frequently refer to today's environment as "late in the cycle." Unfortunately, given the wanton indifference to the appropriate pricing of risk on the part of developed market monetary authorities, that's a bit like saying someone "may have had a sip" when they are so inebriated they can barely speak or stand. At the same time, seeking to fund their organizations' spending obligations at pension plans, endowments and insurance companies, institutional allocators have become increasingly aggressive in their search for strategies and investments that will meet those obligations, while also offering more protection in the next downturn.
Having a vantage point both as an investor and as a board member and investment committee member of several non-profit institutions for many years, I see quite an array of investment choices, as there has been an explosion in the number of products that have emerged to meet this demand for strategies that will meet their target returns while also offering more downside protection, particularly in the alternatives universe. From my perspective, these dynamics have created a dangerous illusion, where investors are getting less diversification benefit than they think because of label obfuscation, but also due to the masking of structural leverage that is embedded in many of the products that would be more diversifying if not adulterated.
Allocators (and the consultants from whom they receive advice) have sought to create staid order from the cacophonous melee caused by this explosion of options by crafting neatly ordered "boxes" in which to fit all the new offerings. First there was fixed income, then it was private credit, then private credit became direct lending or distressed lending or specialty lending, and then specialty lending became things such as trade finance funds, non-performing loan funds, cannabis lending funds, and many other highly specialized areas. The more choices, the tidier and more creative "benchmarks" that are used to evaluate them.