That shift has been building for more than a decade. In private credit, for example, growth is often traced back to the aftermath of the global financial crisis, when tighter regulation constrained bank lending and pushed borrowers toward non-traditional sources of capital. What began as a workaround has since taken on a more durable role. Global private debt assets have expanded from $232 billion in 2007 to $1.9 trillion in 2023, according to Preqin, pointing to demand that extends well beyond a single market cycle.
Within portfolios, the appeal is less about access to niche assets and more about how those assets behave. Real estate, infrastructure and private credit tend to be anchored in contractual cash flows or underlying business activity, rather than daily price discovery.
“Many alternative investments have long-term contracts, physical assets, or private business activity,” Renaud says. “They tend to be less sensitive to daily market swings than publicly traded stocks and bonds.
That difference becomes more visible in stressed environments. Public assets can reprice quickly and often in tandem. Alternatives tend to reprice more gradually, as valuations are driven by underlying cash flows and periodic appraisals rather than continuous market trading.
“The steady stream of income smooths the performance of the portfolio,” Renaud says. “You don’t see the same swings you see in public markets.”