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Q2 Alternative Opportunities report

June 16, 2026
Invesco
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Amid geopolitical and economic uncertainty, we remain neutral on how we’re allocating risk within our alternatives portfolio. Base interest rate reduction has paused, and the oil shock from the Iran conflict is expected to increase inflation and long-term rates. We favour defensive assets, such as private debt, real assets, and hedged strategies.  (Read the complete Alternative opportunities Q2 insights)

Private credit: Overweight as spreads begin to widen in public markets

We remain overweight direct lending as we believe all-in yields remain attractive for senior positioning, especially in the core middle market. Significant private equity dry powder and a backlog of exits point to a continuation of improved deal activity. We’re also overweight real estate credit, given high levels of current income potential and a recovering real estate equity market.

Q2 private credit summary

 

Overall

Valuations

Fundamentals

Secular trend

Direct lending

Overweight

Neutral

Neutral

Attractive

Real asset credit

Overweight

Attractive

Neutral

Attractive

Alternative credit

Overweight

Neutral

Neutral

Attractive

Source: Invesco, Alternative Opportunities – Q2 outlook, pg. 5

Private equity (PE): Underweight due to moderating valuations 

We remain modestly underweight private equity. Beneath the surface, we’re beginning to normalise our views on leveraged buyouts versus growth strategies. PE free cash flow yields have risen in Q1, continuing a trend we’ve seen since 2012 and improving relative to public equities.

Q2 private equity summary

 

Overall

Valuations

Fundamentals

Secular trend

Private equity

Underweight

Unattractive

Neutral

Neutral

Invesco, Alternative Opportunities – Q2 outlook, pg. 14

Real assets: Slight overweight as valuations approach trough, start to appear attractive in real estate equity

We remain slightly overweight in real assets, favouring income-driven, lower-capital-expense sectors in core real estate. Our infrastructure view is positive, supported by the correction in valuations, strong fundamentals, and powerful secular tailwinds.

Q2 real assets summary

 

Overall

Valuations

Fundamentals

Secular trend

Real estate

Overweight

Attractive

Neutral

Neutral

Infrastructure

Overweight

Unattractive

Attractive

Attractive

Invesco, Alternative Opportunities – Q2 outlook, pg. 23

Hedge funds: Overweight due to current levels of arbitrage spreads 

Hedge funds with lower betas to market risk may be a valuable alternative within a portfolio, in our view. We continue to see hedge funds as attractive, however, our view is moderating as capital markets activity picks up and the outlook for stock markets improves.

Q2 hedge funds summary

 

Overall

Valuations

Fundamentals

Secular trend

Event-driven and arbitrage

Overweight

Neutral

Neutral

Attractive

Systematic trend

Overweight

Neutral

Neutral

Attractive

Invesco, Alternative Opportunities – Q2 outlook, pg. 31

Read the complete Q2 Alternative Opportunities report.

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  • Investment risks

    The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.

    Alternative investment products may involve a higher degree of risk, may engage in leveraging and other speculative investment practices  that may increase the risk of investment loss, can be highly illiquid, may not be required to provide periodic pricing or valuation information to investors, may involve complex tax structures and delays in distributing important tax information, are not subject to the same regulatory requirements as mutual portfolios, often charge higher fees which may offset any trading profits, and in many cases the underlying investments are not transparent and are known only to the investment manager. There is often no secondary market for private equity interests, and none is expected to develop. There may be restrictions on transferring interests in such investments.

    Important information

    All data is provided in USD and as of 23 February 2026 sourced from Invesco unless otherwise stated.

    This is marketing material and not financial advice. It is not intended as a recommendation to buy or sell any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication.

    Views and opinions are based on current market conditions and are subject to change.

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