BlackRock reports that ultra-wealthy investors are ramping up exposure to private credit, with over 50% of family offices globally expressing optimism for the asset class.

Nearly one-third of respondents said they plan to increase allocations this year, more than any other alternative asset.

The findings, based on a survey of 175 family offices, suggest that demand for private credit is being driven by portfolio diversification needs and the search for higher yields than those available in public bond markets.

While private equity remains a core allocation for many, a combination of lagging returns, liquidity constraints, and slower capital recycling has prompted wealth managers to take a more selective approach to manager relationships and fee structures.

“They are diversifying their exposure within private markets,” said Armando Senra, Head of the Americas Institutional Business at BlackRock. “Interest is shifting from private equity growth to private credit and, increasingly, infrastructure.”

According to Lili Forouraghi, Head of Family Offices and Institutional Clients at BlackRock, investors are particularly drawn to infrastructure themes tied to decarbonisation, artificial intelligence, and data centre development.

The survey revealed that alternative investments now account for 42% of average family office portfolios, up from 39% in the previous year. In some cases, private credit now represents between 15% and 30% of portfolios.

Despite the waning sentiment around private equity – where 70% of respondents are neutral or bearish – many investors continue to engage via secondaries, direct deals, and co-investments.

Notable names backing the private credit trend include Andre Koo Jr., heir to a prominent Asian financial dynasty, and UK property billionaires David and Simon Reuben.

BlackRock, which manages $11.6tn in assets, has recently committed close to $28bn across three deals to expand its alternatives platform. This includes its $12.5bn acquisition of Global Infrastructure Partners and a pending $12bn deal for HPS Investment Partners, signalling its intent to challenge major players like Blackstone and Apollo.

Source: Bloomberg

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