24 May 2022
In the 15 years since the global financial crisis (GFC), a key feature of developed economies’ monetary policy has been ultra-low interest rates. In pursuit of higher yields, this has seen Australian investors – like their global peers – seek out opportunities from a broader range of asset classes. This, argues Uyi Ighodaro, Division Director at Macquarie Capital, has forced them to get comfortable with investing further up the risk curve in order to generate higher returns.
"Sovereign wealth funds, pension funds, insurance funds and others are moving away from a pure focus on fixed-income assets like government and corporate bonds – as well as publicly listed equities and cash," explains Uyi. "To secure higher long-term returns for their clients and investors, they are incorporating some higher-risk alternative asset classes – including private equity (PE), infrastructure, credit and real estate – within their portfolios."
The numbers highlight the appeal: between Q1 2016 and Q4 2020, PE achieved 106 per cent returns, versus the 30 per cent achieved by the ASX 2001.