Published on 
March 13, 2023

Alternative Investments and Private Debt Digest - February 2023 Edition

Aleksandra Yurchenko

This month, we've gathered the most interesting stories on alternative investing and digital lending. We're showcasing some of the juicier headlines to keep you in-the-know about what's going down out there! Let's dive into all that these exciting sectors have to offer...

Alternative Assets and Private Debt

  1. Time for private markets to grow your portfolios
  2. Momentum for private debt funds is building
  3. Why Are CLOs Increasingly Attractive?
  4. Publicly Traded REITs vs. Non-Traded REITs: What’s the Difference?
  5. Will 2023 be the year for alternative assets and investments?
  6. What Is Sustainable Investing Portfolio Management?
  7. The Top Five Alternative Investment Sectors In 2023

Time for private markets to grow your portfolios

After a big drop in public markets, savvy investors have long seen the potential rewards of investing fresh capital into private markets. With great entry points available across both equity and debt investments - but with inherent risks too - it's no surprise many are turning to this strategy as an opportunity for strong returns over time. Just remember that these opportunities come with the added challenge posed by illiquidity – you'll need patience if you're tying up your money.

Despite an uncertain economic landscape, private debt strategies have emerged as a reliable source of income and diversification in the face of tightening monetary policy, stubborn inflation levels, and slow growth. 

Momentum for private debt funds is building

Investors are rushing to capitalize on opportunities in private debt as interest rates climb, since these investments can offer a reliable source of returns. Banks' increasingly stringent lending policies have made companies more wary about the economic future and created an attractive environment for those searching out riskier yet potentially lucrative investments like direct or mezzanine lending. Last year saw record-breaking private debt deals with $10.8 billion being announced around the world - up 89% from 2021. 

Why Are CLOs Increasingly Attractive?

Investors are finding increasingly attractive yields in the varied asset class space, with collateralized loan obligations (CLOs) leading the way. With higher returns than traditional products despite similar levels of risk and portfolio diversification to boot – it's no wonder why investors consider CLO investing so advantageous. The added bonus? These high-yielding investments don't necessarily come from increased credit risks - rather they're due to an appreciation for their complexity as well as a preference for quick liquidity. It seems like borrowing costs may have reached its peak too, making this sound smarter investment even better: strong net income plus great arbitrage opportunities await savvy equity investors. 

Publicly Traded REITs vs. Non-Traded REITs: What’s the Difference?

Real estate can be a great way to diversify your portfolio, and there are two main types of REITs that provide industry exposure - traded or non-traded. Non-traded REITs tend to be less correlated with the stock market, making them ideal for inflationary times when you want stability in your investments. Meanwhile publicly traded REITs give investors access to real estate without tying up too much cash while still offering liquidity and dividend potential.

Retail investors often look to REITs as a great investment option due to their simple entry and availability. The most accessible are publicly traded, which can be found on popular investing apps like Robinhood or Fidelity. For those wanting even more return potential, non-traded and private REITs may be the way forward - though you'll need an experienced broker for these types of deals.

Will 2023 be the year for alternative assets and investments?

Investing in alternative assets, such as forestry and FinTech products like cryptocurrency, has been a hot topic lately. After all, UK Forestry delivered almost double the annual return of the FTSE 100 over 15 years... proof that diversifying your portfolio could really pay off. Robin Amlôt chats with Daniel Harman to get an inside look at why this focus on alt investments is rapidly growing—and what their future market will truly be shaped into.

What Is Sustainable Investing Portfolio Management?

With climate change becoming an increasingly pressing global concern, it's no wonder that savvy investors are looking to ensure their portfolios align with the changing times. But how do you tell which investments are focused on sustainability and nonetheless won't come at a cost? Are there ways of curating an eco-friendly portfolio without having to sacrifice your retirement goals in the process?

It's totally understandable to feel a bit overwhelmed by the complicated world of Wall Street, but that doesn't mean you can’t make sustainable investments. All it takes is a little research and consideration for your financial goals - then you'll be ready to get into portfolio management with confidence.

The Top Five Alternative Investment Sectors In 2023

Alternative investments are becoming the go-to for savvy investors who want to see their portfolios through even in uncertain economic times. There's no one size fits all, but my general advice is that anywhere from 30% up to 70% of an investor's portfolio should be made up by these alternatives. Some of the most popular trends include Merchant Debt/Factoring, Private Equity Healthcare Investments, Artificial Intelligence and Real Estate - with a few Ancillary Trends thrown into the mix!

When it comes to investing, diversifying your portfolio is key! To make sure you have a balance of growth potential, income generation and asset protection look into alternatives that aren't connected to equities. That way you can be smarter with the moves you make in the market.

Alternative Lending

  1. Seeing an Opportunity, CRE Debt Funds Raise Massive War Chests
  2. Bankrupt Crypto Lender Celsius Network Pursues New Buyer Despite Existing Offer – What's Going On?
  3. Inflation, cybersecurity key concerns for Philippine microfinance industry
  4. Lending fintech Abound raises £500mn in largest round so far
  5. The rise of art-backed loans is spectacular—here's how they work

Seeing an Opportunity, CRE Debt Funds Raise Massive War Chests

With big banks backing off, debt funds are having a field day. Investors have an abundance of options as different types of loans and property sectors become available from diverse risk strategies like core-plus or opportunistic. Meanwhile fund managers can adjust returns depending on how much leverage they provide - the more adventurous going for mezzanine debt while conservative players stick to lower leveraged senior loans at the top end of the capital stack. With plenty of options available for their capital, sceptics may be more particular when selecting where it should go- which is why the CRE debt funds must prove that they have an effective strategy along with superior underwriting abilities. 

Bankrupt Crypto Lender Celsius Network Pursues New Buyer Despite Existing Offer – What's Going On?

Celsius Network, the bankrupt crypto lender, is looking for a final buyer after NovaWulf Digital Management announced their deal to buy its lending operations in February. As debtors of Celsius attempt to close out this bankruptcy case with the U.S Bankruptcy Court of New York  by presenting a sale plan , they're also pondering other potential bids that could help them turn things around and get back in action!

The creditors committee has got behind Celsius' plan to return crypto assets back to their customers starting June. This move is part of a larger reorganisation effort for the lender’s retail platform and mining business, following its filing for Chapter 11 bankruptcy in July 2020. On top of that, they are looking after all stakeholders with this generous wallet containing $25 million worth of digital assets as custodial account holders can now withdraw from it.

Inflation, cybersecurity key concerns for Philippine microfinance industry

This year, microfinance customers will be facing a potentially huge hurdle: soaring inflation. That could make paying back loans more difficult than ever before. Filipino fear of data theft and cybersecurity issues has made many hesitant to use online lending platforms, while predatory lenders taking advantage of people is also on the rise - prompting government regulators like BSP (Bangko Sentral ng Pilipinas) and SEC (Securities & Exchange Commission) to take action in terms of introducing caps on loan fees or upping requirements for digital app registrations.

Lending fintech Abound raises £500mn in largest round so far

Abound, a fintech dedicated to providing alternative lending through the ingenious combination of open banking and AI risk assessments, just raised £500mn in their biggest funding round yet. Founded by two senior credit experts only last year, this fantastic platform is rewriting the rules when it comes to financial services – quickly offering hope for borrowers previously overlooked by traditional banks due its innovative approach that reduces risk exponentially.

The rise of art-backed loans is spectacular—here's how they work

Bridging the gap between art and finance, Sotheby's is hopping on board with a new securities service. With over $1bn worth of loans under its belt already, they've seen an impressive 50% jump in loan portfolio growth from 2021 to 2022 - now they're taking it even one step further by offering customers who have significant collections securitisations as personal loans backed up against their artwork.

About the author

Aleksandra Yurchenko

Aleksandra is managing investor relations at KILDE, a regulated platform for alternative investments. KILDE is powering digital lending firms with debt capital to reach underbanked customers in South East Asia.


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