Patrick Lui, Chief Investment Officer and Managing Director at GRT Capital Management, recently participated as a guest panelist speaker at the 2026 Walton Conference in Phuket, Thailand, to discuss asset allocation strategies and private market opportunities in today’s complex investment landscape.
📊 THE PANEL
Patrick shared the stage with three distinguished investment experts:
- Narayanan (Sam) Sambasivan – Risk and compliance veteran with 20+ years across 40 countries, including leadership roles at Credit Suisse and Amicorp Group.
- Choy-Soon Chua – Real estate investment leader with 25+ years of global experience, formerly at GIC and SEB Asset Management managing multi-billion dollar allocations.
- Stanley Howard – Founder and Director of Teneo Partners Limited, a Japan-licensed securities firm specializing in connecting global asset managers with institutional investors across Asia.
💡 KEY INVESTMENT THEME: A SHIFT IN ASSET ALLOCATION
Equity Valuations at Historic Highs Signal Caution
Current S&P 500 valuations stand at 28-30x P/E ratios, significantly above the 17x long-term average and ranking in the 85th-90th percentile historically. Based on historical figures, such valuation level was followed by low single-digits return on average in the next 3 years. From a cyclical standpoint, there is increasing downside risk that prudent portfolio managers must address.
GRT Internally Favors Private Credit Over Equities and Public Credit
In response to these market conditions, GRT’s internal investment framework takes a decisive but defensive stance: favoring private credit as the core return driver. The rationale is clear and data-driven:
Private credit has historically delivered superior downside protection compared to public bonds during major market stress periods. According to the Cliffwater Direct Lending Index, during the 2008 Global Financial Crisis, direct lending declined only -6%, in contrast to -26% for high-yield bonds (ICE BofA US High Yield Index) and -29% for leveraged loans (Morningstar LSTA US Leveraged Loan Index).
In the COVID-19 market shock of Q1 2020, the Cliffwater Direct Lending Index recorded a drawdown of -5%, while the ICE BofA US High Yield Index fell -13% and the Morningstar LSTA US Leveraged Loan Index fell -11%.
Beyond downside protection, private credit historically generated 10.9% average annual income returns, nearly double that of leveraged loans (5.9%) and 85% higher than high-yield bonds (7.4%) per 20-year Cliffwater Direct Lending Index data.
Patrick emphasized the importance of collateral quality as the defining differentiator:
Real Assets as Collateral: A Preferred Asset Class
GRT prioritizes real assets as preferred collateral for private credit investments. For example, farmland can be a proxy for land collaterals, which demonstrates below features:
- Historical Returns: According to the NCREIF Farmland Index data, farmland has delivered approximately average annual total returns of 10.15% with 6.82% volatility over the 1992-2024 period—substantially lower volatility compared to equity markets
- Counter-Cyclical Performance: NCREIF Farmland Property Index delivered +20% returns during the 2008 GFC when other assets declined
By contrast, unsecured lending strategies could carry substantially higher loss severity and recovery risk. Real asset collateral stands out for its stability, tangibility, and ability to preserve value across economic cycles.
📌 KEY TAKEAWAY
In an environment of elevated equity valuations and muted forward returns, a strategic shift toward private credit backed by quality real asset collateral offers superior risk-adjusted returns. Private credit’s historical resilience through market downturns, combined with its income generation and the protective characteristics of real asset-backed lending, is a good component for portfolio allocation that traditional fixed income cannot match.
The differentiator lies not in chasing yields in saturated markets, but in disciplined capital allocation to private credit strategies with strong collateral underpinnings—where lower historical drawdowns, and tangible assets combine to deliver sustainable returns across economic cycles.
Disclaimer:
The content represents general educational and informational commentary on investment strategy and market conditions, based on a panel discussion held at an industry conference, and is for professional investors only. This content is NOT an advertisement, investment recommendation, or solicitation to buy, sell, or hold any financial instrument. Past performance is not indicative of future results.
