DWS is looking to “dramatically improve liquidity” in private assets
DWS is assessing how to “dramatically improve liquidity” in private assets in order to serve the retail market correctly.
“The first products for the retail market have been income-based yield with a sliver of liquidity, and have been polarised in single asset classes,” Dan Robinson, EMEA head of alternative credit at DWS told Alternative Credit Investor. “There is not a lot of diversification.
“DWS is looking at how to dramatically improve liquidity. This can be done by combining a number of different asset classes.
Read more: DWS boosts US real estate credit team with four JP Morgan hires
“These could include short-tenor private credit, liquid structured credit, leveraged loans and high yield bonds.
“We are interested in how these could combine with shorter-term loans such as working capital finance and real estate refurbishment loans, so that part of the book is always maturing and self liquidating.”
The asset manager wants to take investment technology from insurance solutions into the retail market, Robinson added.
Read more: DWS appoints CLO portfolio manager to alternative credit team
The wealth channel has been a huge focus for private capital managers in recent years, as they look to diversify their sources of funding and achieve greater scale. But regulators and industry commentators have raised concerns about the suitability of these relatively illiquid products for individuals.
“I think the regulator wants to see more retail investors put money into private markets, including via ELTIF 2.0 structures,” Robinson said. “But they want to see it done in a risk-controlled fashion especially with regards to the provision of liquidity.
Read more: DWS launches capital solutions arm in alternative credit push
“We believe governments and regulators want people to lend to the real economy, the digital economy, green assets and energy transformation, all of which are key focus areas for DWS.”
DWS’ alternatives business manages €111bn (£94.7bn) of assets, with a particular focus on real estate, infrastructure and liquid real assets.
Read more: DWS boosts alternative credit team with London hire