Investors are increasingly favouring hedge funds and multi-strategy vehicles over private credit amid ongoing market uncertainty, according to a report by Bloomberg citing comments from UBS Global Wealth Management co-presidents Iqbal Khan and Robert Karofsky.
Speaking at an investor conference on Thursday the pair said client sentiment remains constructive despite geopolitical tensions and periods of market volatility.
Karofsky noted that investors continue to participate actively in markets while maintaining a measured approach to risk. He described overall client activity levels as healthy and suggested that financial markets appear to be anticipating some degree of easing in Middle East-related tensions.
The comments add to a growing body of evidence from major financial institutions indicating that investor appetite has remained resilient despite concerns around inflation, geopolitical developments and stresses in certain segments of private markets.
Within alternative investments, UBS is seeing a notable shift in allocation preferences. Khan said demand remains robust across the alternatives landscape, although investor interest is moving between strategies rather than expanding uniformly across the asset class.
According to Khan, hedge funds and multi-strategy offerings are attracting increased allocations, while private equity continues to maintain strong investor support. By contrast, enthusiasm for private credit strategies has moderated.
The remarks come as private credit faces heightened scrutiny following a period of significant fundraising growth. Recent months have seen elevated redemption activity and fund outflows across parts of the sector, prompting questions about liquidity and valuation dynamics within private markets.
Signs of pressure have also emerged elsewhere in the alternatives industry. Swiss investment manager Partners Group recently introduced redemption restrictions on one of its funds following an increase in withdrawal requests, highlighting broader challenges facing some private market strategies.
As one of the world’s largest allocators to private markets and a major distributor of alternative investment products to both institutional and high-net-worth investors, UBS remains closely positioned to monitor shifts in investor demand. Earlier this year, the bank said its direct balance-sheet exposure to private credit remains limited.
