Strategy in Focus: Challenges to Income Generation

In the final part of our series on income-generating private fund strategies, we examine the challenges that impact income-focused investors and address concerns about allocating to income-focused alternatives funds.

• Declining interest rates globally will have mixed impacts on income-generating private funds: some debt funds may see declining income even as real estate funds benefit from improved valuations

• The significant interest shown by our surveyed investors in asset-backed lending strategies will draw scrutiny in such areas from regulators, as disintermediation in the banking system continues

• Due diligence on income-generating funds carries some unique idiosyncrasies as LPs may treat them similarly to traditional fixed-income products, requiring distributions at regular intervals or a built-in liquidity option