At Rivkin, we know that the investment landscape doesn’t stand still, and neither should your portfolio. Over the past few years, we've seen a dramatic shift in market conditions, and our job has been to ensure your wealth is not only protected but continues to grow in a more balanced and resilient way.
Back in the wake of COVID-19, interest rates were near zero. In that environment, equities were the obvious choice for investors looking to generate returns. And for good reason, there simply weren’t many alternatives. Many of our clients had equity allocations well above 80%, and that made sense at the time.
But as the world began to recover, the environment changed quickly. Inflation took hold, and central banks responded with one of the fastest rate-hiking cycles in decades. We saw the writing on the wall early. Rising interest rates meant opportunity, especially outside of traditional equity markets.
That’s when we began working closely with clients to adjust asset allocations. We shifted significant portions of portfolios towards income-paying private assets. One of the standout performers in this transition has been private debt. Unlike traditional bonds, private debt benefits directly from higher levels of interest rates – many of the loans are floating rate, which means income has increased as rates have risen. While many expect central banks to ease in the wake of tariffs, private debt yields will move lower, but importantly, many of the private debt funds have interest rate floors built into their contracts, meaning minimum interest rates that will still pay investors a healthy income.
But we didn’t just chase yield, which currently sits at 9.5%. Within private debt, we focused on what we believe are lower-risk areas of lending. We selected experienced managers who have invested across cycles, and who structure deals with strong covenants and meaningful security. In other words, capital preservation remained at the heart of every decision.
The result? Equities have come down from over 80% of client portfolios to below 50%. And that shift has made all the difference.
With global equity markets experiencing ongoing volatility, as I write the ASX200 is down -6.1% today alone, taking a drop from recent highs to above 15% – driven most recently by the uncertainty around tariffs and geopolitics -these allocation changes have helped buffer portfolios. The more balanced mix we’ve built is paying monthly income, weathering market swings, and continuing to deliver strong risk-adjusted returns.
And it’s not just private debt, allocations to private equity and commercial property, which provide further diversification and help smooth out the ride in times of equity market stress.
We’re proud of the results we’ve delivered through this transition, and even more proud of the strong relationships we’ve built with clients during this period of change.
As always, we continue to monitor markets closely and are ready to make adjustments when needed. If you’d like to review your asset allocation or learn more about how these private investments are performing, don’t hesitate to reach out.
