Cloud 9fin
Hedging our debts
Aug 28, 2024
In this engaging discussion, private credit reporter Peter Benson and senior reporter Shubham Saharan dive into the rising interest of hedge funds in the private credit market, attracted by potential higher returns. They unpack the challenges hedge funds face in this competitive landscape, including skepticism from investors and tough fundraising conditions. The conversation also highlights the contrast between hedge funds and traditional private credit players, exploring the evolving dynamics and promising opportunities in this financial arena.
09:04
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Quick takeaways
- Hedge funds are increasingly drawn to private credit due to the pursuit of higher returns, driven by investor demand for better performance.
- Despite the potential advantages, hedge funds must navigate fundraising challenges and investor skepticism while adapting their strategies in a competitive market.
Deep dives
Growing Demand for Private Credit
The surge in demand for private credit among hedge funds is largely driven by investors' appetite for higher returns. As traditional investments fall short, hedge funds are compelled to explore alternative asset classes like private credit, which has demonstrated superior performance in recent years. For instance, while credit hedge funds returned approximately 2.5% in the first quarter of the year, direct lending funds outperformed with returns over 3%. This trend highlights a shifting landscape where hedge funds seek to meet the increasing expectations of limited partners who desire more robust investment outcomes.
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