The notion of a post-rate world is arguable, as anyone in the capital markets over the past two decades would attest. But with so many variables in today’s crosswinds, investors in private capital believe that, as a relative matter, the direction of interest rates is less significant than how tariff policies will roll out in the coming months. 

Relative performance is also critical to how those investors assess their choices among a myriad of alternatives as well as public options. With interest rates at the high end of historic levels, some specialized strategies such as litigation finance or pharma royalties may attract attention. The challenge is to attain scale of deployment and consistency of returns. 

Private capital is never examined in a vacuum. It inhabits a portfolio among liquid and other illiquid asset classes, each with their own risk and return characteristics. Most US managers already have credible private credit exposure. To increase that share, they often have to find other categories to pull from, assuming those positions won’t be sold at a loss.