Private Placement Debt Helps Pensions to Diversify

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Jennifer Potenta
OCT 31, 2022

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Private Placement Debt

What benefit can private placement debt bring to well-funded pension funds?

Based on our analysis upwards of 95 percent of the asset class is investment grade,1 so private placement debt is a complement to the public fixed income component of pension fund portfolios. Incorporating the asset class into the portfolio can help bring diversification benefits as well. If you look at the set of names in a typical private debt portfolio, the overlap with public indices tends to be less than 5 percent. This is beneficial for pension funds, which often seek to improve diversification by limiting exposure to a single issuer.