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One scoop to start: At the heart of Apollo’s private credit machine is debt arbitrage. This is how the firm’s in-house insurer has raised capital to fund its lending without turning to policyholders.
One for the diary: The FT’s Future of Asset Management North America event takes place on October 7-8 at Convene 30 Hudson Yards, New York, featuring renowned speakers across the industry. Register here and use the code AMNL10 for a 10 per cent discount on your in-person or digital pass.
In today’s newsletter:
Are UK assets in trouble?
Investors flag private market risks
Asian stocks hit record highs
Are UK assets in trouble?
The UK faces fiscal challenges, from a multibillion pound black hole in public finances to the rising cost of long-term government borrowing.
Although the UK is not unique, developments in its economy ought to cause investors concern, writes Philip Coggan. Both equity and bond markets tend to struggle to make progress when borrowing costs are rising.
With inflation almost twice the target level, the Bank of England has little scope to cut interest rates substantially from their current level of 4 per cent, making it hard for domestic equities to shine.
Does this make UK equities cheap? Ian Harnett, chief investment strategist at Absolute Strategy Research says they’re not a steal in terms of dividend yield or the historic price-to-earnings ratio.
UK assets certainly have some appeal, though. The higher rate of bond yields, for example, means gilts offer an attractive income as other savings rates fall.
Many Britons are also holding excess savings in cash to the tune of £614bn according to Barclays, prompting questions over whether there is a need for policy changes to help encourage some of this to flow into investments.
Although the UK has suffered from a dearth of initial public flotations, there are reasons to be optimistic.
A number of private capital firms are planning to list some of their portfolio companies, which could help pave the way for a revival of flotations.
Europe has also struggled from a drought of IPOs, but a series of upcoming flotations, including Verisure, ISS Stoxx and Swiss Marketplace Group, could help to galvanise the market.
Still, as Coggan writes, contrarians might perk up when considering that UK shares are attractively priced compared with the US stock market.
The downside of private assets
More asset managers are piling into private investments, opening up a sector that was once the preserve of institutions and the ultra wealthy.
Franklin Templeton is among the latest fund groups seeking to push further into the market, writes Amelia Pollard. The $1.6tn manager has hired Daniel Gamba, formerly of BlackRock and Northern Trust, for a new role of chief commercial officer to help spearhead its expansion into private products.
Although the group’s chief executive Jenny Johnson is keen to “democratise” access to such asset classes with potentially higher returns, she believes their illiquidity means extra diligence is needed to assess them.
“We need to ensure that everybody has fair access to those markets, but they also need to understand the risks,” she told the FT.
“I’ve heard people make comments that made me a little nervous — not from our firm but others — about bringing alternatives to the wealth channel that were, in my opinion, a little bit flippant,” she said.
“I just worry that those who haven’t sold into [the wealth] channel don’t understand that nuance,” she added, referring to the fact that some products are not suited for individuals to own. “And that can be a risk if the wrong product ends up” in their portfolio.
Even though wealthy individuals have been increasingly snapping up private credit in particular, some institutional investors in the US are allocating less capital to this sector amid concern about looser underwriting standards and rising credit risks.
A Financial Times analysis of public records shows 70 major US public pension funds reported an 18 per cent decline in allocation to private credit in the first six months of 2025 from a year earlier.
Public pensions have been a key source of capital for the sector, which posted an overall 40 per cent drop in North American fundraising in the first half of the year, according to financial data provider Preqin.
Chart of the week
Stocks in Japan, South Korea and Taiwan ended the week at record highs on Friday as investors bet Asia’s chipmakers would benefit from an artificial intelligence boom and interest rate cuts in the US.
The surge in the three markets has driven the MSCI Asia-Pacific benchmark near an all-time high. The index is outperforming the MSCI World gauge, which only tracks developed markets, by the widest margin in eight years.
Asian equities followed a rally on Wall Street, where the S&P 500 closed at a record high on Thursday. Investors widely expect the US Federal Reserve to cut interest rates this week after August data showed slowing jobs growth.
US rate cut expectations and dollar weakness were benefiting Asian stocks, said Xin Yao Ng, investment director for Asian equities at Aberdeen. “Both of these are useful for Asia especially on the emerging Asia side.”
The tech-heavy bourses of Japan, South Korea and Taiwan have ridden a wave of investor enthusiasm for AI, as the countries include semiconductor groups crucial to the technology.
Shares of South Korean chipmaker SK Hynix jumped 7 per cent on Friday to an all-time high after the company announced a milestone in its AI chip development.
Japan and South Korea have also been buoyed by optimism over corporate governance reform drives aimed at increasing shareholder returns.
Five unmissable stories this week
Phoenix Group is pulling £20bn of funds from Aberdeen Group as part of plans to manage more of its annuities portfolio internally.
Goldman Sachs has been handed a $40bn pension mandate to run money for a group of Shell’s pension funds.
The hedge fund billionaire Steve Cohen wants to build one of New York’s first casinos, drawing him into local politics.
Australian pension funds are planning to make more than $1tn of new investments in overseas markets over the next decade.
Elliott Management has built a large stake in payments automation company Bill Holdings and has become a top three shareholder of Kansai Electric Power.
And finally
Le Manoir aux Quat’Saisons © Belmond
Le Manoir aux Quat’Saisons in Oxfordshire will undertake a redevelopment in January 2026, with a reopening scheduled for summer 2027. The manor house hotel is renowned for its Michelin-starred garden gastronomy and was founded by Raymond Blanc OBE in 1984. After 41 years of leadership, Blanc will step down from running the restaurant to become a “Lifetime Ambassador”.
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