Navigating the private debt landscape 

A spotlight on the sub-strategies

Private debt has emerged as a compelling alternative investment option, offering unique opportunities for diversification and potential downside protection. However, navigating this complex asset class requires careful consideration.

Encompassing a wide array of investment strategies, private debt can offer exposures that vary by risk-return, security type, capital structure seniority, portfolio-level leverage, underlying borrower type, underlying assets, income mechanism, and more.

At Mercer, we view private debt as consisting of four sub-strategies:

  1. Direct lending
    Loans directly originated from performing corporate borrowers across the lower middle-market, middle market, and upper middle-market spectrum. 
  2.  Structured credit
    Strategies that finance portfolios of loans or assets. 
  3. Specialty finance
    Strategies that have a particular sector or asset focus.
  4. Opportunistic credit
    Strategies that focus on companies or assets that are distressed, stressed, or undergoing a period of complexity. 


In this whitepaper, we break down the four sub-strategies and highlight several areas of focus. This provides a digestible roadmap and assists in tailoring exposures based on specific risk and return objectives. 

At Mercer, our team of alternative investments specialists can help create an alternative investment strategy that fits your organization’s investment objectives. With our significant knowledge, deep expertise, and global scale and resources, we can help you access a variety of alternative investments tailored to your needs.

Whether you're considering private debt or other alternative investments for the first time or have an established investment portfolio, our flexible approach can help you achieve your goals. Contact a Mercer consultant today to get started. 

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