U.S. direct lending is projected to have the highest 10-year return, 11.1%, according to BlackRock's recently published quarterly capital market assumptions. That's followed by U.S. private equity devoted to buyouts, which has an estimated 10% return but expected volatility of more than 32%.
Over 20 and 30 years, BlackRock expects U.S. private equity to have higher returns than other alternatives.
While BlackRock expects a 10% return for U.S. private equity in the next decade, it has a -2% to 23.7% range. Infrastructure debt has a 5.5% projected return but a narrow 4.4% to 6.7% range.
U.S. direct lending and U.S. private equity have the highest correlations to global equity but they're negative vs. global government bonds. Global hedge funds have a 0.49 correlation to global equities and a -0.04 to global government bond returns.
