Using illiquid credit to address long-term investment goals

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Despite having successfully navigated volatile markets and the uncertain economic outlook in 2020, long-term institutional investors continue to face significant challenges. Surveys show 66% of pension funds consider themselves to be cashflow negative and 53% of those that are cashflow positive today expect to be negative within five years. New risk-based capital regimes mean insurance companies face higher capital requirements which limit their investment latitude, just at a time when real yields are at historical lows and fears of stretched valuations are at the forefront of investors’ minds.

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