David Hunt, PGIM President and Chief Executive, recently joined Squawk Box Asia to discuss his outlook, including why he believes fixed income and private alternatives should be particularly noteworthy the current cycle.
According to David, Asian high-net-worth investors are increasingly turning to private markets and diversifying into alternative investments. Watch David’s full interview with CNBC Asia for more insights on market trends.
Key takeaways:
- PGIM continues to see conditions supporting ‘weakflation’ characterized by modest growth, solid labour market trends, and a level of above-target inflation that contributes to a higher-for-longer rate environment.
- In terms of geographic exposure, institutional investors are shifting from Europe to the U.S. and Southeast Asia, while remaining cautious about China. Japan is a newly favored market.
- Bonds should be a go-to asset class, with investors seeking to add duration as rate conditions evolve later this year. Likely funding sources include investors seeking more productive uses for cash and better-funded pension funds aiming to reduce risk.
- Private credit as an asset class has been growing rapidly and, as it matures, investors are becoming more selective, favoring managers with established track records, underwriting skills and direct sourcing capabilities.
- While private assets are projected to play a much larger roll in institutional portfolios, the biggest opportunity is among high-net-worth investors, especially in Asia where demand for private alternatives is pronounced.
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