Monday, March 4, 2024
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Alternative Investments | BlackRock

JIM BARRY: We have faced enormous economic challenges over the last year. And while vaccines and signs of economic recovery give us hope, we know we have a lot of economic rebuilding ahead of us. We think alternative investments have an important role to play in this rebuilding, by virtue of their adaptability and longer time horizons. My name is Jim Barry, CIO for BlackRock Alternatives.

Alternative investments were already essential when we came into the crisis—in our view, a core part of an investor’s portfolio. While investing in these longer dated illiquid investments is more complex, investors increasingly look to them as they strive to boost returns, generate incremental income, and provide diversification from the balance of the portfolio. This demand continues as these investments have shown their resilience through the pandemic and investors seek opportunities amid the dislocations Covid has caused and the trends it has accelerated.

Two of the most powerful trends we see are digitization and decarbonization. The accelerated shift to working, shopping and recreation online is having a significant impact on company business models, and we believe companies backed by private equity and debt are among those best positioned to take advantage of this. We also expect opportunities to finance restructurings of companies that have fallen into distress. The move to a greener economy has major implications.  They start in the power and energy sector, extend into the worlds of infrastructure and real estate but ultimately impact every sector and every region.  And here too, our view is that private capital is well suited to financing the changes.

A long time horizon is one reason private investments can take on these tasks. Another key factor is the ability to structure each private transaction for a specific circumstance. Because they can be manufactured to potentially limit downside risk or insulate cashflows from exposure to broader market factors, private investments can exhibit resilience as longer term trends play out.

We believe the current market environment provides significant opportunities for investors in alternatives. While the markets are competitive, we think the changes underway and the reconstruction ahead will enable significant capital to be productively deployed. We believe the most successful investors will be those with the origination capacity and reach, the underwriting rigor and discipline, and most importantly, the patience to select the assets well.

Thank you for listening.

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