The Parliamentary Pension scheme has introduced a new asset class called alternative credit allocation with a 5% allocation. â€œThe fund should also benefit from the illiquidity premium association with this type of debt mandate,â€ states a report published in February.
A number of alternative credit opportunities have arisen from new regulations in the banking sector, and new cap-ad requirements have led banks to retreating from the loan market, meaning more institutional investors are lending directly. Here is what Cazenove say about the growth:
Those IFAs who observed the growth in retail alternative assets post 2003 will nod sagely. We know the cost of venturing outside the regulated zone, but it seems the fund managers cannot resist the temptation of off-balance sheet financing.