Private Debt as a Strategic Asset: Performance, Structural Integration, and Portfolio Efficiency in Private Capital Markets

Private Debt as a Strategic Asset: Performance, Structural Integration, and Portfolio Efficiency in Private Capital Markets

Abstract:

This paper explores private debt (PD) as a growingly significant asset class in private capital markets. It evaluates PD across three dimensions: performance, structural integration into private equity and fund operations, and contribution to portfolio efficiency using Modern Portfolio Theory. Drawing on empirical return data, market studies, and expert interviews, the study demonstrates that PD delivers competitive,
risk-adjusted returns, exhibits lower volatility than other private assets, and enhances portfolio optimization outcomes. Furthermore, PD plays a vital structuring role in leveraged transactions and fund strategies. These findings suggest that PD is a core, not peripheral, component of modern institutional investment design.

Keywords: Debt, Portfolio Optimization, Private Equity, Alternative Investments, Risk-Adjusted Return