Alternative assets, as their name suggests, are a different investment option compared to the traditional ones found in the capital market, such as bonds and stocks. They stand out for being assets with lower liquidity and higher risk, which in the long term could bring us a higher profitability. They include instruments such as debt and private equity, private equityreal estate and infrastructure.

As reported by the Chilean Association of Investment Fund Managers (ACAFI), during the first half of 2024, 50 new funds were created for a total of US$410 million in assets under management, of which 86% corresponds to alternative assets, with private debt funds leading the way.

Luis Alberto Letelier, president of ACAFI, pointed out that more than half of these new funds invest directly in Chile, mainly in projects that drive development, such as renewable energy plants, loans for entrepreneurs and startups. startupsand to facilitate access to housing.

The boom in alternative assets is due to the need for investors to adapt to a low interest rate environment, according to various specialist analyses.

These assets not only offer higher potential returns than traditional instruments, but also allow for greater portfolio diversification. The trend towards investment in private debt has grown, especially in a context where PFAs are looking for alternatives that help them to optimize the performance of pension funds.

In addition, interest in private debt - in particular - has increased, as it provides an avenue for better returns in a low-interest environment. The search for attractive returns is leading PFAs and other investors to consider these assets as an integral part of their investment strategies.

In this sense, the growth of alternative assets and private debt represents an evolution in investment strategies, where investors can recognize the value of diversifying their portfolios through these less conventional options.

With a focus on maximizing returns and managing risk, this asset class could redefine the investment landscape, offering new opportunities for those willing to explore beyond traditional markets.

Assets Managed by the Mutual Fund industry in U.S. dollars

Source: https://acafi.cl/fondos-de-inversion-publicos-alcanzan-los-us-37-483-millones/

Assets under management by mutual funds in pesos

Source: https://acafi.cl/fondos-de-inversion-publicos-alcanzan-los-us-37-483-millones/

Claudia Jamett

Private Debt Analyst Fynsa AGF