Private Assets 2Q25 – Anchor in the Storm
Diversify into a hybrid portfolio for alpha returns and resilience ahead of market gyrations
Chief Investment Office4 Apr 2025
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Private assets have consistently provided strong hedging benefits across macroeconomic cycles:

  • Apart from downside protection, effective diversification requires an illiquidity premium to offset diversification costs.
  • A hybrid portfolio strategy, combining high illiquidity premia of private assets with liquidity of public assets, best exemplifies this; the result can be superior drawdown protection and returns uplift, compared to the 60/40 portfolio.
  • Private equity remains undervalued against public counterparts with a decade-high valuation gap of 3.6x, while private credit is seeing tailwinds from  Basel III endgame and an impending maturity walls from leveraged bank loans.
  • Adopt a fund of open-ended fund approach to gain private asset exposure in a hybrid portfolio. This approach best capitalises the coming private market surge, and confers resilience amid macroeconomic uncertainty. 

Figure 1: Every loss requires a greater gain to breakeven

Source: DBS

 

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