Investment Ideas

Accessing alternative income

As the era of ultralow interest rates grinds on, investors are increasingly challenged to generate the income they need. Many are turning to private credit strategies, which have the potential to help meet income needs but may present hurdles of their own.

Each private credit strategy comes with its own risk-return profile and market dynamics. To support investors as they put these tools to work, we have prepared a series of briefings on the main strategies, with BlackRock portfolio managers addressing the key questions for each.

Explore alternative sources of income

Private Credit Overview
Jimmy Keenan, Global Head of Fundamental Credit, explains the global rise of private credit and where it fits in the context of the broader credit market.
Infrastructure Debt
Erik Savi, Global Head of Infrastructure Debt, provides insight on how long-horizon investors seeking income can benefit from the space.
Real Estate Debt
Bob Karnes, Global Head of Real Estate Debt, explores the role mezzanine debt can play in a diversified portfolio.

Practical paths in a low-return landscape

Josh Levine, Head of BlackRock Alternatives Specialists for the Americas, shares his perspective on the challenges institutional investors face and where they can look for income in this climate.

Key attributes of three debt strategies

 

Infrastructure debtMiddle market debtReal estate
mezzanine debt
Borrower Infrastructure projects or corporations Corporates Commercial real estate projects
Liquidity Moderately illiquid: some secondary market Illiquid: limited secondary market Moderately illiquid: some secondary market
Risk characteristics Idiosyncratic project risks; may include prepayment or regulatory risks Idiosyncratic company- and deal-specific risks Idiosyncratic deal-specific risks
Investment horizon 5 to 40 years 3 to 6 years 3 to 5 years
Inflation linkage Implicit inflation protection if floating rate or explicit through coupons tied to rate of inflation; link to real asset values Implicit inflation protection from floating rate structure Implicit inflation protection from floating rate structure

Source: BlackRock, July 2016

Contact us for more information to learn more about these solutions.