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First Attractive Deep Diving: FT Alphaville’s friends dig into the private equity insurance nexus to find out what happens when the world’s dullest industry becomes extremely exciting.
In today’s newsletter:
Hedge funds are trying to expand to individual credit
Wealth Managers prepare UK savings to be put into private assets
Exodus from long-term bonds fearing US debt load and inflation
Private credit boom attracts top hedge funds
Among the world’s largest and oldest hedge funds, Millennium, Point 72 and Third Points are usually specialized in trading in so-called liquid securities ©Alex Wheeler/ft Montage/Getty Images
Hedge funds have observed a boom with private credits. And they want some of the action.
Large hedge funds are pushed to private credit as they are trying to establish themselves as diverse financial institutions, with Millennium Management, POINT72, and third point all trying to launch new funds and strategies.
The third point is the $20 billion company with a history of activist investors, and will launch a publicly traded private credit fund next month called Third Point Private Capital Partners.
Millennium, which manages more than $75 billion in assets, is considering whether to launch another fund to invest in less liquid assets, including private credit, the first new fund since it was founded more than 30 years ago.
Earlier this year, Steve Cohen’s Point72 hired Todd Hirsch, formerly senior managing director of Blackstone, to lead personal credit strategies. He also recruited Alex Greeley, Jaidit Marsch of Carlisle and Ladderchan of Brookfield Asset Management from Linden Partners.
“Hedge funds are in the asset collection business,” said the person who leads a banker into the sector. “The private credit boom is really attracting attention.”
Non-bank lending, which includes everything from private credit or risky corporate loans to debts related to music loyalty, has become a major growth area as asset managers replaced banks as lenders.
Among the world’s largest and oldest hedge funds, Millennium, Point 72 and Third Points are typically specialized in trading so-called liquid securities such as stocks, bonds and goods, and move quickly.
However, private credit offers a way to target higher returns, access long-term capital, and solidify your position as more than just a hedge fund, attracting potentially rich valuations for your business.
“If you are the founder of a hedge fund and hit the succession stage after its retirement, how am I going to get the best plural?” the banker said.
Investors such as pension funds, donations and sovereign wealth funds were also increasingly searching for “one-stop shops,” they added.
Read the full story here to find out why forging a hedge fund into private credit isn’t entirely easy.
UK Wealth Manager Watch Private Assets
Some of the UK’s biggest wealth managers are planning to take advantage of private market opportunities, writes Emma Dunkley of London.
Something like RBC Wealth Management, Evelyn Partners and Quilter Cheviot told the Financial Times they are trying to provide wealthy clients with greater access to these assets, from private equity to private credit and infrastructure investments.
Further down the wealth ladder, investment platforms, including Hargreaves Lansdown and AJ Bell, are considering whether to sell these products to so-called “DIY” investors.
The advent of the Long-Term Asset Fund, a new regulated vehicle approved by the financial conduct authorities, has given wealth managers a new channel to formerly reliant on mutual funds.
LTAF is a type of “evergreen” semi-liquid fund that provides a mixture of private assets, which is difficult to sell quickly, and is easy to offload, such as money market funds and listed stocks.
However, LTAF does not have problems with teething. Some wealth managers said there are operational hurdles to delivering these products. This is due to the way their companies are set up price funds daily compared to low-liquid LTAFs that require a 90-day withdrawal notice.
Others said they were wary of the lack of LTAFS’ track record, but some pointed to concerns about liquidity risk, especially in the aftermath of disgraceful fund manager Neil Woodford, who was stagnant due to liquidity issues.
Still, as people live longer and seek better retirement outcomes, wealth managers are keen to increase allocations to private assets and subsequent higher returns. However, for financial advisors, the liability associated with the highly recommended, high-risk products can prove to be too burdensome.
This week’s chart
Given the height of the Covid-19 pandemic five years ago, investors are fleeing long-term US bond funds at the fastest tax rates, as America’s rising debt load is hampering the attraction of one of the world’s most important markets.
According to Financial Times calculations based on EPFR data, long-term net outflows from US bond funds across government and corporate debt reached approximately $11 billion in the second quarter.
The second quarter’s Exodus was the largest since the severe market turbulence in early 2020, writing Harriet Kralfelt and Kate Duguid in New York, showing a strong shift of about $2 billion from the average inflow in the previous 12 quarters.
Redemption from long-term bond funds widely used by institutional investors is at a time when people feel uneasy about the US financial path. Fund flows only acquire a small amount of the vast US bond market, but provide a proxy for investors’ sentiment.
“This is a much bigger problem. There are many concerns from the domestic and foreign investors community about owning the long edge of the financial curve,” said Bill Campbell, of bond-centric investment firm Doubleline, referring to the flow of funds.
US President Donald Trump’s “big, beautiful” tax bill, which is under consideration in Congress, is projected to add trillions of dollars to U.S. debt over the next decade. The White House countered that high tariffs and growth rates reduce debt.
At the same time, market participants are supporting themselves for the administration’s tariffs on key trading partners to blow away higher inflation, one of the biggest tragedy for bond investors.
Lotfi Karoui, chief credit strategist at Goldman Sachs, said the outflow “reflects concerns about the long-term outlook for fiscal sustainability.”
This week’s 5 unacceptable stories
The European Commission has investigated the Italian government’s controversial stock sale at Monte dei Pasi di Siena last year, claiming that large investors, including UnicRedit, Norges Bank Investment Management and BlackRock, were locked out of the bidding process.
To provide such services, millions of UK savers will have access to “Target Support” to help individuals get better revenue, and to wipe out new rules from financial action institutions.
Stefan Hoops, the current DWS CEO, urged European policymakers to adopt a more practical stance on investment from China and the Gulf, preparing to overhaul Berlin’s hundreds of millions of infrastructure.
Vanguard, the world’s second-largest asset manager, cuts fees for almost half of its bond exchange funds, almost half of its European funds.
US Sen. Elizabeth Warren has requested that some of the nation’s largest private investment groups waive information on lobbying to secure tax credits for Donald Trump’s spending bill.
And finally
Nevermore, 2014© Anselm Kiefer
Vincent van Gogh had a lasting influence on Anselm Kiefer. See the works by these two giants from Art World at the Royal Academy this summer.
June 28th – October 26th, 2025
RoyalAcademy.org.uk
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