- Advertisement -
- Advertisement -

Related

In Depth: Direct Lending – Is Past Performance Promising Too Much?

Latest Report

- Advertisement -

Stockholm (HedgeNordic) – As institutional investors have been chasing yields on the back of ever decreasing interest rates in traditional fixed-income investments, private debt and direct lending strategies, in particular, have become a mainstream allocation in recent years. As with many alternative investment strategies, direct lending has spread from the US to Europe and has increasingly brought the attention of Nordic investors.

Looking at past performance of the strategy, there is little reason not to look at the asset class as a viable option to traditional fixed income exposures. Over the last ten years, according to the Cliffwater Direct Lending Index, the strategy has delivered 9,6 percent annually to a volatility of around 3.4 percent. But as always, past performance is not indicative of future returns, and the question is if the strong risk-adjusted performance can be contained.

Source: Private Debt Investor

Recent yield compression in the industry suggests that tougher times might lie ahead. Increased competition for deals in certain segments of the market has put pressure on internal rate of returns and an ever-increasing inflow of assets to the industry has also left large amounts unused leaving so-called dry powder, i.e. capital not put to work, at elevated levels.

In an effort to put direct lending strategies into a Nordic context, HedgeNordic has interviewed asset managers and allocators active in the region. We sought to find out what trends that are seen in the industry and among investors, what potential risks that lie ahead and whether the appetite for investments in the direct lending space remains.

 

Subscribe to HedgeBrev, HedgeNordic’s weekly newsletter, and never miss the latest news!

Our newsletter is sent once a week, every Friday.

HedgeNordic Editorial Team
HedgeNordic Editorial Team
This article was written, or published, by the HedgeNordic editorial team.

Latest Articles

Small But Mighty: Norwegians Lead Performance Tables

While Sweden and Denmark may dominate the Nordic hedge fund industry in terms of assets under management, 2025 has so far belonged to Norway....

Avanto Right Tail Crosses 100% Since Inception

Lars Mikelsen, portfolio manager of Avanto Right Tail, runs a strategy designed to capture extreme upside events through concentrated bets on themes such as...

Nordic Hedge Funds Extend Solid Run Through Summer

Nordic hedge funds continued their strong run since May, closing out the summer on a positive note with an average gain of 0.5 percent...

Pasi Havia Bids Farewell to HCP, Quant Strategy Carries On

After more than a decade at Helsinki Capital Partners (HCP), portfolio manager Pasi Havia has stepped down from his role, leaving behind the management...

Fresh Talent, New Funds: ALCUR Expands Reach in Retail Segment

After a wave of portfolio manager hires earlier this year, stock-picking fund boutique ALCUR Fonder is preparing to launch several new funds aimed at...

Quirky Questions for Kathryn Kaminski (AlphaSimplex)

Not every hedge fund conversation needs to revolve around performance charts or trade execution. In HedgeNordic’s Quirky Questions series, we look beyond the strategies to the...

Allocator Interviews

In-Depth: High Yield

Voices

Request for Proposal

- Advertisement -
HedgeNordic
Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.