With elevated downside growth risks, high equity valuations, and benign capital markets activity, we’re remaining neutral on how we’re allocating risk within our alternatives portfolio in the second quarter of 2025. In general, we’re more defensive, favouring private debt and hedged strategies versus private equity. Here are key takeaways from each asset class. Read the complete Q2 report.
Private credit: Overweight as spreads begin to widen in public markets
Jeff Bennett, CFA®, Head of Manager Selection Invesco Solutions
Ron Kantowitz, Head of Direct Lending, Invesco Private Debt
Charlie Rose, Global Head of Commercial Real Estate Credit
Deal flow remains challenged with recent activity well below the 2021 peak. The leveraged buyout (LBO) environment is muted because large valuation gaps have kept many private equity deals on hold. Alternative lenders are poised for a robust year of loan origination due to a surplus of real estate debt dry powder and a continued pullback by banks. We remain constructive on the backdrop for direct lending because of macroeconomic and anticipated deployment tailwinds. Real estate credit remains our preferred way of accessing real estate markets.
Q2 private credit summary