Floating to the top

Floating rates mean debt funds outperform in times of rising interest rates.

Debt strategies perform better than other private market strategies in times of rising interest rates.

The findings from Hamilton Lane may not be entirely surprising, given the floating rate nature of most private debt loans which insulates them from the effects of base rate rises.

Debt funds that actively invest during a rate hike see a significant uplift in returns, while buyout funds tend to see reduced returns.

Growth equity and venture capital returns tend to be hit hardest by rate rises, seeing very low returns in those periods.