Has 2022 Killed-off The 60/40 Portfolio?

Kirsten Bode, co-head of private markets, Muzinich & Co 

As we look ahead to 2023, we believe that private debt could be an asset class that investors gravitate towards, to supplement their traditional equity and bond allocations, as they look to combat the challenging investment environment. The asset class has some relevant characteristics, notably:  its floating rate nature can provide a hedge against rising rates and inflation, the illiquidity premium because of the long-term nature of the investment, as well as its low correlation with traditional bonds and equities, diversification at geographic, sector and number of investments levels and low volatility due to the private nature of the deals.  

With a recession likely on the way in 2023, we believe that private debt with its defensive characteristics, can have a significant role to play.