Client conversations Why private markets may be right for investors
There are many reasons for investors to consider private markets, including potential enhanced returns, possible improved income, and diversification.
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Alternatives Q2 Alternative Opportunities report
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 favor 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 |
Private equity (PE): Underweight due to moderating valuations
We remain modestly underweight private equity. Beneath the surface, we’re beginning to normalize 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 |
Real assets: Slight overweight as valuations approach trough, start to appear attractive in real estate equity
We remain slightly overweight in real assets, favoring 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 |
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 |
(Read the complete Q2 Alternative Opportunities report)
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Important information
NA5543371
Dry powder refers to liquid assets or cash reserves that can be quickly accessed for investments or emergencies.
Information is provided as of May 29, 2026, and sourced from Invesco unless otherwise noted.
Arbitrage is the strategy of taking advantage of price differences in different markets for the same asset.
Beta measures a stock's price volatility relative to the overall market. It is an important factor for investors to check when they want to choose a stock that matches their tolerance for risk.
A spread in finance is the difference between two related values, such as prices, rates, or yields.
Alternative products typically hold more non-traditional investments and employ more complex trading strategies, including hedging and leveraging through derivatives, short selling, and opportunistic strategies that change with market conditions. Investors considering alternatives should be aware of their unique characteristics and additional risks from the strategies they use. Like all investments, performance will fluctuate. You can lose money.
Event-driven strategies refer to an investment strategy in which an institutional investor attempts to profit from a stock mispricing that may occur during or after a corporate event.
Trend following strategy is an investment or trading approach that aims to profit by identifying and riding sustained price trends in various markets.
Investments in real estate-related instruments may be affected by economic, legal, or environmental factors that affect property values, rents, or occupancies of real estate. Real estate companies, including REITs or similar structures, tend to be small- and mid-cap companies, and their shares may be more volatile and less liquid.
The opinions referenced above are those of the author as of May 29, 2026. The opinions expressed are based on current market conditions and are subject to change without notice. These opinions may differ from those of other Invesco investment professionals. These comments should not be construed as recommendations, but as an illustration of broader themes. Forward-looking statements are not guarantees of future results. They involve risks, uncertainties, and assumptions; there can be no assurance that actual results will not differ materially from expectations.
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