Aaron Chastain of NEPC was recently quoted in a Pensions & Investments article, where he discussed how investors are increasingly embracing private credit and global equity strategies to diversify their portfolios, mitigate risk, and pursue higher returns in light of current market conditions and uncertainty. View excerpts below or read the full article on the Pensions & Investments site here.
U.S. retirement plans in Pensions & Investments’ latest annual survey reported their strongest gains in three years, even as the portfolio payoff from diversification hit an air pocket and persistent equity market dominance by a handful of U.S. tech giants continued to dog investment teams.
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Aaron Chastain, an Atlanta-based principal and corporate solutions leader with NEPC, said the steady appeal of private credit likely reflects its relatively attractive balance of risk and returns. “A lot of particularly large plan sponsors … still have return needs for their growth portfolio but are wanting to incrementally derisk as they get better funded. I think we’re seeing a little bit more focus on private credit as that middle ground,” offering high returns with both superior safety and shorter duration than something like private equity, he said.
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NEPC’s Chastain said that urge to diversify away from an overconcentrated S&P 500 index has led clients to seek out more active strategies with less reliance on the Mag Seven, including global equity strategies offering broader opportunities to seek alpha.
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Chastain said with credit spreads over Treasuries narrowing last year, some investors have concluded that they’re no longer getting paid to hold credit. Switching into passive Treasuries leaves them positioned more cautiously to lean into credit again in the event of market dislocations.
Policy uncertainty, asteroid mining and satellites.
Click here to read the full article on the Pensions & Investments site.