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Investors shifting to private credit as bonds lose hedging appeal, says Bobby Jain

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Bobby Jain, founder and CEO of New York-based hedge fund firm Jain Global, said that hedge funds face growing competition from private credit firms for investor capital, on a panel at the UBS Singapore Family Wealth Forum on Thursday, according to reports. 

At the event, which was attended by around 300 UHNWIs with at least $30m in investable assets, the former Millennium Co-CIO noted that investors who once relied on bonds to hedge against stock market volatility are now seeking alternative, “uncorrelated” asset classes, of which private credit “has taken up a lot”. 

Jain explained that the traditional 60/40 portfolio model, which allocates 40% to bonds, is becoming less effective. Historically, bonds have rallied when markets falter, providing a hedge against equity market downturns. However, Jain added: “Now (buying bonds to hedge equities) is not obvious anymore. The equity market could go down because the bond market goes down.” 

Despite challenges in fundraising for venture capital and private equity funds, Jain described the environment for alternatives, including hedge funds and private credit, as “reasonable”, adding that many investors are still “underweight” in this area. 

Jain Global is set to launch next month with at least $5bn, having initially planned to raise $10bn. The hedge fund firm is expected to employ over 30 staff members in Asia, according to an earlier report by Bloomberg, leveraging a management model that will give local leaders key responsibilities like hiring and risk management. 

UBS’s Global Family Office report, released in May, indicated that only 23% of family offices plan to increase their allocations to hedge funds. Almost half intend to maintain their current levels, while 12% foresee a decrease. 

Preqin’s latest private markets outlook predicts that the private credit market will nearly double to reach $2.8tn by the end of 2028. 

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