Alternative investments: opportunities in private debt  

Where are the opportunities in the private debt market? 

Today’s private debt market is growing and changing fast, expanding the opportunity set available for institutional investors. This has driven both increased competition and complexity.

A volatile macro backdrop, a surge of new entrants and increasing dispersion in manager performance have made sourcing and accessing the most attractive private debt opportunities that much harder. 

We see a number of pockets of value emerging in the current environment: 

  1. Senior private debt – which looks particularly compelling from a relative value perspective. These loans offer historically high yields, favourable terms for lenders,  and fee compression. In combination, these factors may create value.
  2. Opportunistic credit – which encompasses distressed debt, special situations, and capital solutions, is another current area of focus. Currently, capital solutions are attracting the most interest as these help companies navigate transitions or complex capital structure issues. They are particularly active through the current shifting backdrop, and could potentially offer lenders mid-to-high teen returns.
Determining your objectives and how private debt can work for your investment portfolio is the first step towards building a well-diversified allocation. Watch this video to learn more.

At Mercer, our team of alternative investments specialists can help craft a private debt allocation that fits your organization’s investment objectives. We have significant knowledge, deep expertise, and global scale and resources – available to help you access all types of alternative investments, tailored to your needs.

Whether you're considering making an allocation to private debt for the first time or have an established investment portfolio, our experts can help you achieve your investment goals. Contact a Mercer consultant today to get started.

Our alternative investments approach can flex to suit you

  • Client-centric flexible approach

    Our work begins with the knowledge that no two clients are the same. Whether it’s cash-flow, targeted returns or familiarity with private markets, each organization has its own unique requirements. We know that pension providers, endowment funds, insurance companies and wealth management firms will all have different approaches and needs. Our flexible services allow us to meet these requirements.

  • Extensive research platform

    We construct flexible private markets solutions across all asset classes. These are designed to help meet each client’s particular needs, objectives and appetite for risk. We offer a range of services, from liquidity budgeting and strategy design to in-depth operational due diligence and standardized reporting. Our dedicated, experienced teams streamline even the most complex of processes to make our clients’ lives easier.

  • Global reach, local resources

    Our fund selection process is rigorous. Mercer typically reviews more than 2,000 fund offerings each year. Following this global review process, we perform due diligence, assign ratings and make recommendations for investments. These are based on each client’s unique portfolio objectives, cash-flow requirements and risk tolerance.

Our experience in alternative investments

$182Bn

US$182 billion1 in global alternatives assets under advisement

$34Bn

US$34 billion1 in global alternatives under management

260

2602 alternatives professionals

30+

30 years experience in private markets

31

312 offices globally

18 years

18 years track record managing hedge fund portfolios

1 June 30, 2023

2 December 31, 2023

Alternative investment strategies

The alternatives strategy you choose will depend on a range of factors, including your specific objectives, risk tolerance and liquidity requirements. We can help you explore all the available options and customize a strategy that works for you.

  • Co-investments

    Co-investments have the potential to deliver greater diversification, lower fees and higher net returns and, provide a more tailored exposure set.

  • Impact investing

    Impact investments have the potential to help you find an optimal balance between making a positive change and delivering better returns.

  • Infrastructure

    Infrastructure investments have the potential to deliver greater diversification, inflation protection and longer-term sustainability.

  • Private debt and credit

    Private debt strategies have the potential to deliver a higher-yield than listed bonds and retain the potential for capital growth.

  • Private equity

    Private equity strategies leverage opportunities from the vast number of companies listed under private ownership.

  • Real-estate

    Investing in real-estate is linked to important sectors of the real economy, including long-term trends such as population shifts.
Find out more about our solutions and tools and how they can enhance the resilience of your portfolio
Related solutions
Related insights

Contact us

Find out how we can help you diversify your portfolio with alternative investments.