Alternative investments are maturing as an asset class, said Peter Martenson, head of global distribution and partner in the La Jolla, Calif., office of placement agency Eaton Partners LLC.
Alternative investments are being pushed “deep into pension plans,” Mr. Martenson said. Private equity is moving into global equity allocations and bonds are moving into credit allocations that have both public and private debt in the same portfolio.
The convergence is being driven by the “consumer of products as well as consultants,” he said.
Traditionally private equity investments are long-term lockup vehicles — 10 years or more — and hedge funds have medium- to short-term lockups. But these distinctions are blurring, Mr. Martenson said.
Lockup periods now are being established to better match the duration of the investment, rather than to fit the traditional structure of a private equity fund or hedge fund, he said.
“One fund … does (non-performing loans), non-performing mortgages. It looks like a hedge fund when you look at the terms, but on the other side it looks like private equity because there is no day-to-day trading and day-to-day liquidity,” Mr. Martenson said.
Private equity managers are expected to invest in private equity and private debt, Mr. Martenson said. One example is a fund offered by Centerbridge Partners LP., a New York-based alternative investment firm, that contained half non-control debt and half control buyout equity in the same vehicle, he said
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