The current rout in the stock market according to BlackRock, Inc. (NYSE:BLK) could be down to investors shifting their focus to more illiquid holdings. Real estate holdings and private credit are turning out to be a safe-haven for investors, seeking to generate returns amidst the current market volatility.
Growing Demand for Illiquid Assets
Having conducted a survey on 170 large institutional investors, BlackRock says that most of them are planning to increase their allocations to real estate holdings and private credit. The sentiments do not come as a surprise as most investors globally are turning away from stocks, 33% to be precise, according to the study.
BlackRock, Inc. (NYSE:BLK) study shows that many investors are looking to pour a good chunk of their investments on high-yield sectors. A long term play in the stock market is no longer a consideration as most investors remain wary of when things will bounce back to normalcy. More than 30% of investors according to the study are planning to boost their investments in securitized assets. As many 27% could be planning to channel their fund into US bank loans.
Building allocations on illiquid assets is a strategy large investors are using to offset the pressures of recurrent low-interest rates. Low interest rates have had catastrophic effect on the stock market having already squeezed returns from, safe holdings such as bonds.
Investors Cautious Approach
Since the start of the year the Standard & Poor Index has shed 6.7% in market value and on track for its worst performance since 2009. Investors in the US and Canada according to BlackRock, Inc. (NYSE:BLK) are the ones slashing their investments in numbers from the stock markets. Clients in Europe the Middle East as well as Africa, on the other hand, are planning to scale back hedge fund investments.
The cautious approach that investors are portraying at the moment all but continues to evoke concerns of the global economy plummeting into yet another recession. Recent slump in oil prices along with consistent rout in stock markets continue to raise red flag.
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