Alternative asset research and index provider LPX Group has launched a new index for listed private debt.
The Direct Lending Index is intended to serve as a standard benchmark to track performance of listed companies that provide debt capital to unquoted companies. The index is based on a total of 41 companies identified worldwide with a total market capitalisation of $56.5 billion, with the majority being based in the US.
The DLX tracks performance since 2009 and shows listed direct lending providers delivered an annualised geometric mean return of 10.46 percent and a standard deviation of 21.41 percent. This compared with the MSCI Financials returns of 6.31 percent and 19.07 percent standard deviation over the same period.
Dr Michel Degosciu, co-founder and managing director of LPX, said: “Since the global financial crisis, private debt has become its own asset class for investors, driven by attractive post global credit opportunities and as a lucrative alternative to the low yields observed within traditional fixed income and credit markets.
“Investors’ access to this market was nigh-on impossible previously as it is a notoriously challenging one to track – a niche market without any standard definitions. This DLX Direct Lending Index overcomes this for investors, broadening investor access on a systematic basis that allows them to benefit from this burgeoning asset class.”
LPX said the index has a high risk-adjusted return on average and low correlation to traditional equity markets. Stocks listed on the index have a relatively stable dividend yield of 8.93 percent on average between 2009 and 2021.