The swelling private-equity and debt markets are looming as possible threats as possible threats to investors once interest rates rise and financial conditions tighten, according to Michael Arone of State Street Global Advisors.
Arone says that market is likely to keep growing for now. But since the market lacks transparency compared to the stock market, investors may not understand the risks they’re taking.
Other experts are also saying the rapid growth in leveraged loans and other private debts in the past decade might become dangerous in a downturn.
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Stocks have surged to record highs as investors feel the Federal Reserve is ready to pull the economy back from the brink. But there are still dangers lurking just the same.
Michael Arone, chief investment strategist for State Street Global Advisors — which manages $2.5 trillion — says trouble may be brewing in the enormous private equity and debt markets. While investors have clamored to get into those areas in the last decade, Arone argues that many of them are taking bigger risks than they realize.
“Private equity markets could be the source of your next challenge when interest rates and financial conditions tighten,” he told …read more
Source:: Businessinsider – Finance