Why wealthy investors are turning to private debt funds

Markets, for all their noise and novelty, are cyclical in nature. Optimism builds quietly, peaks loudly, and then often without warning gives way to unease. At the time of global market volatility, investors particularly those who have already played the equity cycle are asking a different question: where can I find steady, risk-adjusted returns without being at the mercy of global sentiment swings?

For those of us who’ve worked across asset classes, through crises and calm alike, the answer increasingly lies in the private credit space. More specifically, in well-constructed Alternative Investment Funds (AIFs) that are deeply rooted in India’s real economy.

Over the past more than a decade, private debt AIFs have evolved from a niche concept into an integral part of India’s capital formation story. What distinguishes them is their ability to generate predictable outcomes in an otherwise unpredictable environment. Thanks to their low correlation to public markets.

Private debt AIFs can access opportunities that are less susceptible to macro shocks. Their portfolio doesn’t need to be marked to market every day, nor does it invite knee-jerk redemptions in the face of geopolitical risk, in the end, stability matters. It is for these reasons sophisticated investors (HNIs, UHNIs, family offices) in India are reallocating steadily into AIFs as depicted by the exponential growth in commitments, which denotes the amount clients are willing to invest in AIFs.

As India’s economy deepens and diversifies, so too must our investment approach. The contours of growth are shifting from urban centres to hinterlands, from conventional banking to bespoke credit, and from public markets to private enterprise. In this evolving landscape, Alternative Investment Funds offer more than just protection from volatility; they offer purposeful participation in India’s next phase of economic expansion.

 

 

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