Private Credit and Real Assets: The Resilient Investment Options in a Rising Rate Environment
As interest rates continue to rise and inflation pressures persist, it's crucial for investors to consider the resilience of their portfolios in this environment. At Polar Star Capital Management, we believe that private credit and real asset investments can offer compelling opportunities for investors.
Private credit, consisting mainly of floating rate loans, offers several advantages in a rising rate environment. Floating rate loans can increase income as interest rates rise, providing a potential hedge against inflation. Additionally, private transactions offer stronger structural protections through privately negotiated terms and due diligence. This results in less volatility, lower duration, and lower correlation compared to public markets.
Moreover, real asset investments can be an attractive option in a rising rate environment due to their ability to perform well. In particular, income-generating real assets have a track record of growing net income during expansionary periods, outperforming securities and other assets. This has been witnessed firsthand by our team at Polar Star Capital Management through our extensive experience in real asset investing.
Investing in real assets can provide a hedge against inflation and offer stable income streams. Our team at Polar Star has extensive experience in real asset investing and can provide valuable insights on the benefits of this investment strategy. Private transactions offer a more efficient and effective solution for borrowers seeking certainty in terms and flexibility in structure.
As the global economy continues to face challenges, it's essential to take a fresh look at assets with resilience in the face of rising rates and inflation.