Private equity and credit are set to outperform publicly traded assets in the aftermath of the COVID-19 pandemic as investors looking to take advantage of market dislocations pile in, according to alternative investment manager Hamilton Lane.
"Investors have recognized that the greatest periods of outperformance in the private markets relative to public markets are as you're going through and coming out of a downturn," Andrew Schardt, the firm's head of direct credit, said in an interview.
Private credit vehicles raised $57 billion in the first half of the year, buoyed by appetite for distressed strategies, according to research firm Preqin. Still, opportunities have been limited thus far, in part due to the Federal Reserve's unprecedented efforts to shore up liquidity. Second-half earnings may shed light on whether there will be more deterioration that could lead to attractive investments, according to Mr. Schardt.
"One of the challenges on the distressed side has been that if you're too early, you're wrong," he said. "So it's a fine line of balancing how you're going to approach the market and the opportunity recognizing you need to have the capital ready to go, but be patient."
