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Ares & Unlocking Private Infrastructure Investing

12:00 PM CST | November 19, 2025 | Live Virtual Session

You’re invited to join iCapital and Ares for a CE-eligible webinar exploring the evolving landscape of infrastructure investing. Tyler McConnell, Managing Director at Ares, will share his perspective on how infrastructure is shaping opportunities for advisors and their clients in today’s investment environment. Infrastructure is increasingly viewed as a resilient and essential asset class, offering long-term value and portfolio diversification aligned with advisor and client needs.

This webinar qualifies for 1 CFP and 1 CIMA CE credit.

What You’ll Learn

The current landscape and outlook for infrastructure investing
How infrastructure fits into client portfolios across market cycles
Insights from Ares on sourcing, structuring, and managing infrastructure assets

Speakers

Tyler McConnell

Managing Director in the Ares Global Client Solutions Group, where he focuses on real assets relationship management in the Americas. Prior to joining Ares in 2019, Mr. McConnell was a Director at BlackRock, where he focused on product development, business development and investor relations for the firm’s Real Assets platform. Mr. McConnell holds a B.A., magna cum laude, from Dickinson College in International Business and Management.

Nathan Mazzapica

Managing Director, overseeing the Southwest territory at iCapital. In this role, he partners with RIAs, Family Offices, Independent Broker Dealers, and Ultra High Net Worth Investors to deliver innovative investment solutions and strategic guidance.

Prior to iCapital, Nathan served at Axcelus Financial (formerly Lombard International), the global leader in Private Placement Life Insurance and Variable Annuities. Before that, he was a Managing Director at Republic Capital Group, one of the nation’s premier investment banking firms focused on the RIA space. His career in financial services began at Salient Partners, a $17 billion RIA based in Houston, Texas.

Outside of work, Nathan enjoys quality time with his wife Megan and their son Judah. He is also an active volunteer at Houston’s First Baptist Church, where he finds fulfillment in serving his community.

FOR INVESTMENT PROFESSIONAL USE ONLY

The material herein has been provided to you for informational purposes only by Institutional Capital Network, Inc. (“iCapital Network”) or one of its affiliates (iCapital Network together with its affiliates, “iCapital”). This material is the property of iCapital and may not be shared without the written permission of iCapital. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission of iCapital.

This material is provided for informational purposes only and is not intended as, and may not be relied on in any manner as, legal, tax or investment advice, a recommendation, or as an offer or solicitation to buy or sell any security, financial product or instrument, or otherwise to participate in any particular trading strategy. This material does not intend to address the financial objectives, situation, or specific needs of any individual investor. You should consult your personal accounting, tax, and legal advisors to understand the implications of any investment specific to your personal financial situation.

ALTERNATIVE INVESTMENTS ARE CONSIDERED COMPLEX PRODUCTS AND MAY NOT BE SUITABLE FOR ALL INVESTORS. Prospective investors should be aware that an investment in an alternative investment is speculative and involves a high degree of risk. Alternative investments often engage in leveraging and other speculative investment practices that may increase the risk of investment loss; can be highly illiquid; may not be required to provide periodic pricing or valuation information to investors; may involve complex tax structures and delays in distributing important tax information; are not subject to the same regulatory requirements as mutual funds; and often charge high fees. There is no guarantee that an alternative investment will implement its investment strategy and/or achieve its objectives, generate profits, or avoid loss. An investment should only be considered by sophisticated investors who can afford to lose all or a substantial amount of their investment.

iCapital Markets LLC operates a platform that makes available financial products to financial professionals. In operating this platform, iCapital Markets LLC generally earns revenue based on the volume of transactions that take place in these products and would benefit by an increase in sales for these products.

The information contained herein is an opinion only, as of the date indicated, and should not be relied upon as the only important information available. Any prediction, projection or forecast on the economy, stock market, bond market, or the economic trends of the markets is not necessarily indicative of the future or likely performance. The information contained herein is subject to change, incomplete, and may include information and/or data obtained from third-party sources that iCapital believes, but does not guarantee, to be accurate. iCapital considers this third-party data reliable, but does not represent that it is accurate, complete and/or up to date, and it should not be relied on as such. iCapital makes no representation as to the accuracy or completeness of this material and accepts no liability for losses arising from the use of the material presented. No representation or warranty is made by iCapital as to the reasonableness or completeness of such forward-looking statements or to any other financial information contained herein.

Securities products and services are offered by iCapital Markets, an SEC-registered broker-dealer, member FINRA and SIPC, and an affiliate of iCapital, Inc. and Institutional Capital Network, Inc. These registrations and memberships in no way imply that the SEC, FINRA, or SIPC have endorsed any of the entities, products, or services discussed herein. Annuities and insurance services are provided by iCapital Annuities and Insurance Services LLC, an affiliate of iCapital, Inc. “iCapital” and “iCapital Network” are registered trademarks of Institutional Capital Network, Inc. Additional information is available upon request.

NEW YORK — iCapital¹ , the global fintech company shaping the future of investing, announced a strategic investment in and partnership with LYNK Markets, a leading fintech platform empowering private market distribution in LATAM. This partnership delivers a scalable cross-border investment solution through Private ETNs—registered securities that expand access to alternative investments across the Latin American wealth channel.

“Latin America is undergoing a transformative shift as alternative investments transition from being the domain of institutional investors to becoming increasingly embraced by mainstream market participants. iCapital is helping wealth advisors and their clients gain access to the right alternatives for their needs,” said Lawrence Calcano, Chairman and CEO of iCapital. “Through our partnership with LYNK Markets, Private Alternative Investment Fund Notes offer a scalable, structured solution that provides advisors with simplified access to alternatives—enhancing asset allocation and portfolio flexibility. For asset managers, these Private ETNs reduce barriers to entry, accelerate fund launches, and streamline distribution—driving greater transparency and efficiency across the alternative investment ecosystem.”

Through this partnership, asset managers can efficiently embrace alternative fund strategies, simplifying investment processes, due diligence, reporting, and settlement via major international settlement platforms. Each Private ETN carries a unique ISIN for global distribution, accelerating time to market, strengthening offshore channels, and reducing operational complexity while preserving client confidentiality. Wealth managers benefit from broader exposure to alternatives with lower investment thresholds, simplified onboarding, real-time insights, and built-in regulatory confidence via iCapital Marketplace. This new solution is set to be integrated by January 2026.

“Partnering with iCapital brings together two fintech leaders committed to redefining private market investing,” said Mario Rivero, CEO of LYNK Markets. “By combining LYNK Markets’ technology-enabled Private ETNs solutions with iCapital’s advanced distribution and platform capabilities, we’re equipping financial advisors with a new tool to simplify alternative allocations and expand cross-border access for their clients.”

Terms of the agreement were not disclosed.

About iCapital:
iCapital is a global leader, shaping the future of global investing for financial advisors, wealth managers, asset managers, and other industry participants. iCapital offers a diverse and complete range of non-traditional investment products on iCapital Marketplace, Enterprise Solutions, and both Technology and Data Services, designed to help drive better outcomes² for all participants in the ecosystem.

With strategic investment from leading alternative asset managers, wealth managers, and service providers globally, iCapital provides unrivaled access, data connectivity, education, and research programs to advisors and their clients. Leveraging AI and machine learning for digital identity (KYC/AML), iCapital supports compliant and secure investment lifecycle processes.

iCapital’s end-to-end platform manages the lifecycle of non-traditional investment products, making it easier to learn about, buy, manage, and integrate alternative assets, structured investments, and annuities into portfolios, driving growth, scale, and efficiency. Our solution(s) can be customized and offers specific modules as needed.

iCapital has $999.7³ billion of assets serviced globally on its platform, including $272.1 billion in alternative platform assets, $214.9 billion in structured investments and annuities outstanding, and $512.7 billion in client assets reported on, and serves over 3,000 wealth management firms and 118,000 active financial professionals.

Headquartered in New York, iCapital operates globally with 16 offices, including major hubs in Zurich, London, Hong Kong, Singapore, Tokyo, and Toronto, and an industry-leading R&D center in Lisbon. iCapital is recognized for its innovation and leadership, with accolades from Euromoney (World’s Best Technology Provider for Wealth Management), CNBC (World Top Fintech Companies), The Wealthies Alts Investment Platform of the Year, and Forbes Fintech 50.

For more information, visit https://icapital.com | Twitter (X): @icapitalnetwork | LinkedIn: https://www.linkedin.com/company/icapital-network-inc

About LYNK Markets:
LYNK Markets is a leading fintech issuer and administrator of Exchange Traded Notes (ETNs), committed to enhancing global investor access through innovative technology and strategic partnerships.
For more information, visit https://lynkcm.com/

For media inquiries, please contact:
iCapital
[email protected]
+41 43 547 19 61

iCapital, Inc., together with its affiliates "iCapital"
iCapital delivers better outcomes by streamlining financial operations, enhancing technology infrastructure, and empowering smarter decision-making through reporting and analytics.
As of August 31, 2025

IMPORTANT INFORMATION
This material has been provided to you for informational purposes only by iCapital, Inc. and/or one of its affiliates including Institutional Capital Network, Inc. (collectively, “iCapital”). This material is the property of iCapital and may not be shared without its written permission. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission of iCapital. This is not intended as, and may not be relied on in any manner as, legal, tax or investment advice, a recommendation to employ a specific investment strategy, or as an offer to sell, a solicitation of an offer to purchase, or a recommendation of any interest in any fund or security. Security products and services are offered through iCapital Markets LLC (a registered broker/dealer, member FINRA and SIPC), Institutional CN (Europe) – Empresa de Investimento, S.A. (registered with CMVM), iCapital Hong Kong Limited (licensed by SFC) and iCapital SG Pte. Ltd (licensed by MAS), all affiliates of iCapital. Registrations and memberships in no way imply that FINRA, SIPC, CMVM, SFC or MAS have endorsed any of the entities, products or services discussed herein. Financial products made available by iCapital Markets LLC, Institutional CN (Europe) – Empresa de Investimento, S.A., iCapital Hong Kong Limited and iCapital SG Pte. Ltd. may be complex and/or speculative and are not suitable for all investors. iCapital Advisors, LLC is an investment adviser registered with the Securities and Exchange Commission and acts as an adviser to certain privately offered investment funds. “iCapital” and “iCapital Network” are registered trademarks of Institutional Capital Network, Inc.

Discover how to adjust client portfolios faster using alternative investments like private credit, real assets, and secondaries — with practical models and implementation tips inside.

Key Takeaways

Today’s market is shaped by structural volatility
Understand where a traditional 60/40 portfolio may break down
Explore tactical roles for private market strategies
View sample allocations + digital implementation tools
Learn how portfolio construction tools like Architect can help scale your pivot

Who should read this:

Anyone looking to use alternatives and tech to stay nimble in 2025

Financial Advisors

LPs

Wealth Managers

Preview what’s in the guide:

Portfolio Analysis: Sample 60/40 Portfolio vs. Sample 60/40 with Alternatives

20-year analysis: December 2004 – December 2024

Traditional 60/40 Portfolio

Expanded Portfolio with Alternatives

icapital pie chart showing Portfolio Analysis Sample of a 60/40 Portfolio

60% Equities

40% Fixed Income

icapital pie chart showing Portfolio Analysis Sample of 60/40 with Alternatives

50% Equities

25% Fixed Income

15% Private Equity

5% Private Credit

5% Hedge Fund

	Annualized Return	Annualized Volatility	Max Drawdown	Sharpe Ratio
Traditional 60/40 Portfolio	6.8%	10.1%	28.7%	0.52
Expanded Portfolio with Alternatives	Download the full guide to see the full expanded portfolio with alternatives

Source: iCapital. Portfolio analysis is based on iCapital propriety models with data based on availability as of April 30, 2025. Equity performance is represented by the SPDR S&P 500 ETF Trust SPY (domestic) and iShares MSCI EAFE ETF EFA (all). Fixed Income performance is represented by the iShares Core U.S. Aggregate AGG. Private Equity performance is represented by the Generic Private Equity Fund GPEF. Private Credit performance is represented by the Generic Private Credit Fund GPCF. Hedge Fund performance is represented by Generic Multi-Strategy Hedge Fund- GMSHF. Please see “Index Definitions” in the “Important Information” section of this presentation for additional information. For illustrative purposes only. Portfolio analysis does not reflect an actual trading program and no investor actually achieved the performance shown. Past performance is not indicative of future results. Future results are not guaranteed.

Ready to learn how alternatives can help advisors stay nimble

Get the full report and discover how to pivoting portfolios during volatile markets

iCapital The 2025 Advisor’s Guide to Pivoting Portfolios in Volatile Markets downloadable PDF

IMPORTANT INFORMATION

iCapital and its affiliates provide various services through a number of affiliated entities – please refer to Certain iCapital Entities for a full list of entities. iCapital entities are collectively referred to as “iCapital”, and they all are affiliated with iCapital, Inc. and Institutional Capital Network, Inc. Among these affiliates, iCapital Markets LLC (“iCapital Markets”), an SEC-registered broker-dealer, member FINRA and SIPC, offers securities products and services. The registrations and memberships listed in Certain iCapital Entities in no way imply that the SEC, FINRA, or SIPC have endorsed any of the entities, products, or services provided by iCapital. Additional information is available upon request.

This website is for informational purposes only. This website is the property of iCapital and may not be shared, reproduced in any form, or referred to in any other publication, without express written permission of iCapital.

This website and any information included on it are not intended, and may not be relied on in any manner, as legal, tax or investment advice, a recommendation, or as an offer to sell, a solicitation of an offer to purchase or a recommendation of any interest in any fund or security. Financial products, including investment funds and structured investments, are complex and may be speculative and are not suitable for all investors. You should consult your personal accounting, tax and legal advisors to understand the implications of any investment specific to your personal financial situation. This website and the information contained on it is not intended to, and does not, address the financial objectives, situation or specific needs of any specific investor.

This material is provided for informational purposes only and is not intended as, and may not be relied on in any manner as, legal, tax or investment advice, a recommendation, or as an offer or solicitation to buy or sell any security, financial product or instrument, or otherwise to participate in any particular trading strategy. This material does not intend to address the financial objectives, situation, or specific needs of any individual investor. You should consult your personal accounting, tax and legal advisors to understand the implications of any investment specific to your personal financial situation.

Investment Outlook

Direct lending yields have been trending lower because of declining reference rates and intense competition for new loan originations, which is resulting in pricing compression. There are a few reasons behind this. First, when growth in direct lending assets began to scale in the 2015 timeframe, the target market was smaller, mid-market borrowers.¹ Today, direct lending funds are larger and more capital needs to be deployed. One result is larger loans made to larger companies which generally see lower pricing. Larger companies are also seeing the benefits of direct lending and a diversification in their funding mix. Second, over the past two years bank lending has shown signs of improvement for both refinancing and new issuance. U.S. leveraged loan activity has averaged about $300 billion per quarter in 2024 through the third quarter of 2025 relative to average activity of $120 billion over the prior three years.² This sharp recovery has been led by refinancing at tighter spreads, leading to some of the spread compression for new direct loan originations. The outlook should be put into context: direct lending still offers a premium to comparable credit opportunities even if it’s not as strong as it once was. Over the past year, direct lending has provided about 260 basis points (bps) of excess yield to leveraged loans compared to 400 to 500 over the last ten years (Exhibit 1). While yields will fluctuate, excess relative yields should remain—which is what is happening in the direct lending market.³ Should direct lending managers be able to maintain this excess relative yield, capital flows and investor share shift to the market should remain.

Lastly, direct lending managers have historically been focused on financing private equity buyouts. Buyout activity has been a source of origination for direct lenders, and smaller or closely-held companies that make up a big part of buyout activity haven’t had full access to traditional capital markets. As the buyout deal environment improves, more deals should flow to direct loan originators and could be a catalyst for spread expansion.

Recent Market Trends

The debate over the next few years will likely revolve around inflows and deployment. Capital has poured into direct lending funds—assets of $900 billion amount to double the level seen just five years ago (Exhibit 2). But finding attractive opportunities to put this capital to work is the challenge. As mentioned, buyout and M&A activity, which are often a source of new direct loan originations, have been less than robust over the last few years. And competition from both new direct lending funds and bank lending makes sourcing more difficult. Offsetting some of this impact is that the average size of a direct loan has increased in recent years to $80 million in 2023 from $60 to $65 million over the prior five years.⁴ This change is likely due to the growth in market cap of underlying companies.

All this amounts to a decent amount of capital available for deployment. Direct lending dry powder increased by 4% YoY in 2024 to $230 billion, or 26% of AUM, suggesting capital is being deployed at a moderate pace (Exhibit 2). But there are signs that lenders are struggling to keep up their investments with the capital inflows. For example, some non-traded BDCs (business development companies), which are common vehicles for direct lending allocations, have been unable to deploy their targeted amount of fund leverage.

As the deployment topic progresses, credit quality and market expansion are two other forces at work. Manager selection is always important but more so if lenders try to achieve return consistency by compromising on the quality of new originations. To this point, yield compression is perhaps a signal that the market is functioning correctly in that direct lenders are not chasing low quality, higher yielding originations.

More broadly, the market is eying opportunities beyond direct lending. As a measure of scale, private direct loans now account for 62% of all commercial and industrial loans, up from 25% in 2014.⁵ Managers who conclude the traditional middle-market sponsor-backed opportunities are limited are starting to expand to asset-based lending, infrastructure debt, private credit secondaries and other areas. We expect this market expansion theme to continue over the next several years.

Industry Focus: Software

The software industry accounts for about 20% of outstanding loans for private direct lenders.⁶ Software is also the largest sector in the leveraged finance market, double the size of the next largest industry (Exhibit 3). Leveraged loan issuance as a whole is concentrated with three sectors accounting for about 45% of all loans (Exhibit 3).

Software is an attractive sector for lenders (and buyout sponsors) due to the high margin, high cash flow-yield nature of a software business model. The industry is also higher growth and generally has recurring revenue contracts to a diversified customer base. In other words, while direct lending has high concentration in the software industry, software itself is embedded in many other end-industries.

It’s also worth noting the relatively steady contribution that software (tech in general) has made to the broader economy. Over the last thirty years, technology (software and hardware) has contributed about one-third of a point to annual GDP in the U.S (Exhibit 4). For private equity sponsors and lenders alike, this amounts to a steady growth industry with high cash flow yield which is comforting in the context of credit quality.

Performance Snapshot

Direct lending, proxied by the Cliffwater Direct Lending Index, returned 4.5% through the first half of 2025 with some softening seen.⁷ Overall, we expect some moderation of new issue yield and payouts which could weigh on performance compared to the asset class’s longer term historic performance.

Relative to other fixed income alternatives, quality direct lending managers should be able to generate excess yield relative to public fixed income due to an illiquidity premium and originations to smaller companies. This should position the asset class as a compelling complement to a portfolio.

INDEX DEFINITIONS

Bloomberg U.S. Corporate High Yield Index: Measures the U.S. Dollar-denominated, high yield, fixed-rate corporate bond market. Securities are classified as high yield if the middle rating of Moody's, Fitch and S&P is Ba1/BB+/BB+ or below.

Cliffwater Direct Lending Index (CDLI): An asset-weighted index of over 11,000 directly originated middle market loans totaling $264B. It seeks to measure the unlevered, gross of fee performance of U.S. middle market corporate loans, as represented by the asset-weighted performance of the underlying assets of Business Development Companies (BDCs), including both exchange-traded and unlisted BDCs, subject to certain eligibility requirements.

Cliffwater Public BDC Index (CWBDC): Measures the performance of lending-oriented, exchange-traded Business Development Companies, subject to certain eligibility criteria regarding portfolio composition, market capitalization, and dividend history. The CWBDC is a capitalization-weighted index that is calculated on a daily basis using publicly available closing share prices and reported dividend payouts. The CWBDC Total Return Index includes two components: 1) Income Return and 2) Price Return.

Morningstar LSTA U.S. Leveraged Loan Index: An Index designed to deliver comprehensive, precise coverage of the US leveraged loan market. Underpinned by PitchBook and LCD data, the index serves as the market standard for the US leveraged loan asset class and tracks the performance of more than 1,400 USD denominated loans.

Secured Overnight Financing Rate (SOFR) Three-Month: The SOFR is a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities. SOFR futures offer the leading source of price discovery and liquidity on SOFR. Three-Month SOFR futures are cash settled and based on a business-day compounded SOFR per annum during contract Reference Quarter.

END NOTES

Preqin and iCapital Alternatives Decoded, Private credit total assets under management, August 2025.
PitchBook, Credit Markets Quarterly Wrap, October 1, 2025.
Yields refer to direct lending yields based on the Cliffwater Direct Lending Index, relative yields refer to direct lending yield relative to leveraged loan yield based on the Morningstar LSTA U.S. Leveraged Loan 100 Index.
PitchBook, Board of Governors of the Federal Reserve System. Private Credit: Characteristics and Risks. February 23, 2024.
Preqin and iCapital Alternatives Decoded for direct lending Assets Under Management data as of August 2025, Board of Governors of the Federal Reserve System (US) retrieved from FRED for Commercial and Industrial Loan data with data through December 2024.
Based on loan exposure for the 10 largest non-traded BDCs, data from SEC filings and company reports, as of June 2025.
Cliffwater Direct Lending Index, with data based on availability as of August 2025.

IMPORTANT INFORMATION

This material is provided for informational purposes only and is not intended as, and may not be relied on in any manner as, legal, tax or investment advice, a recommendation, or as an offer or solicitation to buy or sell any security, financial product or instrument, or otherwise to participate in any particular trading strategy. This material does not intend to address the financial objectives, situation, or specific needs of any individual investor. You should consult your personal accounting, tax and legal advisors to understand the implications of any investment specific to your personal financial situation.

The information contained herein is an opinion only, as of the date indicated, and should not be relied upon as the only important information available. Any prediction, projection or forecast on the economy, stock market, bond market or the economic trends of the markets is not necessarily indicative of the future or likely performance. The information contained herein is subject to change, incomplete, and may include information and/or data obtained from third party sources that iCapital believes, but does not guarantee, to be accurate. iCapital considers this third-party data reliable, but does not represent that it is accurate, complete and/or up to date. iCapital makes no representation as to the accuracy or completeness of this material and accepts no liability for losses arising from the use of the material presented. No representation or warranty is made by iCapital as to the reasonableness or completeness of such forward-looking statements or to any other financial information contained herein.

Securities products and services are offered by iCapital Markets LLC, an SEC-registered broker-dealer, member FINRA and SIPC, and an affiliate of iCapital, Inc. and Institutional Capital Network, Inc. These registrations and memberships in no way imply that the SEC, FINRA, or SIPC have endorsed any of the entities, products, or services discussed herein. Annuities and insurance services are provided by iCapital Annuities and Insurance Services LLC, an affiliate of iCapital, Inc. “iCapital” and “iCapital Network” are registered trademarks of Institutional Capital Network, Inc. Additional information is available upon request.

Financial advisors often face a common issue: finding an effective way to deliver alternative investment offerings. Model portfolios can serve as a straightforward solution to this problem, minimizing operational disruptions.

As investors increasingly seek the diversification benefits of alternative investments, financial advisors must be equipped with streamlined, outcome-oriented tools to gain meaningful exposure to alternative investments. Rather than selecting individual funds with varying goals and risk profiles, many advisors are turning to integrated, professionally constructed solutions that deliver scale and efficiency.

In 2024, iCapital launched a suite of alternatives-only model portfolios designed to meet this demand. These strategies function much like traditional mutual fund and ETF models that have gained traction in the private wealth space. By combining curated access to top-tier managers with strategic asset allocation and ongoing monitoring, these portfolios are positioned to help expand the adoption of alternatives across the wealth management channels.

Through iCapital’s platform, advisors gain access to model portfolios that simplify implementation, offer built-in diversification, and provide ongoing insights and support. These tools address common challenges and span the full alternative investment lifecycle—from discovery to rebalancing. Whether seeking long-term capital appreciation, income, or tailored client solutions, model portfolios help bridge the gap between traditional portfolios and more modern, diversified allocations.

Five Benefits of Leveraging Model Portfolios for Alternatives

1. Simplicity

Model portfolios offer a convenient, transparent way to access alternative strategies managed by leading investment firms. The strategies are selected and overseen by iCapital’s in-house research team, helping advisors sift through the vast array of alternative investments with an outcome-based approach. Instead of navigating dozens of individual offerings and building custom allocations from scratch, advisors can focus more time on deepening client relationships and growing their practice.

2. Portfolio Construction

These portfolios are built using a disciplined, academically grounded selection process. Asset class and fund-level diversification constraints are applied to help mitigate concentration risk, with each position chosen to add meaningfully to the overall profile. Advisors can also use iCapital Architect, a portfolio analysis tool that visualizes the potential benefits of including alternatives—offering insight into performance, risk, and client-aligned outcomes.

3. Reporting, Monitoring, and Rebalancing

Ongoing oversight is provided by a dedicated research team that delivers monthly performance updates, quarterly market commentary, and annual rebalancing. This reduces the time advisors spend on data aggregation and analysis, enabling them to focus on higher-impact activities while still maintaining transparency and discipline in portfolio management.

4. Operational Efficiency

Technology plays a critical role. iCapital’s proprietary multi-investment workflow (MIW) tool streamlines the investment process by consolidating documentation, pre-populating investor information, and enabling one-click execution across all portfolio components. This ensures trades are processed securely and efficiently, making it easier to scale alternatives across a broader client base.

5. Cost

There are no additional platform fees for advisors or clients using these model portfolios. Investors pay only the fees of the underlying component funds—just as they would if investing in them individually.¹ This cost-neutral structure helps drive adoption by eliminating barriers to entry while preserving value.

As the demand for alternative investments continues to grow, financial advisors are increasingly incorporating them as core components of their client portfolios. With robust tools, research support, and platform integration, advisors now have the means to bring alternatives to a wider audience—helping clients pursue goals of growth, income, and enhanced diversification.

To learn more about iCapital’s model portfolio offerings and how they can support your alternatives practice, visit iCapital.com/model-portfolios.

iCapital Markets LLC and/or its affiliates may receive additional compensation for distribution services for sales of alternative investments included in the iCapital Model Portfolios.

IMPORTANT INFORMATION

The iCapital model portfolios are made available for institutional use only by, iCapital Advisors, LLC (“iCapital Advisors”), an SEC-registered investment adviser that advises certain private investment funds available on the iCapital Platform (“Access Funds”) and provides other advisory services, and iCapital Markets LLC (“iCapital Markets”), a registered broker dealer that distributes the financial products included within the model portfolios. iCapital Advisors, iCapital Markets, Institutional Capital Network, Inc., and iCapital, Inc. are affiliates and are collectively referred to as, together with their affiliates, “iCapital.” The iCapital model portfolios themselves are not funds.

The iCapital model portfolios are provided for informational and educational purposes only and are subject to change. The iCapital model portfolios are not to be construed as a recommendation or an offer or solicitation to buy or sell any security, financial product or instrument, or otherwise to participate in any particular trading strategy. The information is not intended as, and shall not constitute, investment, tax, accounting, or legal advice and is not a recommendation about managing or investing your client’s portfolio or retirement savings; the user should consult his or her personal investment, accounting, tax and legal advisors to understand the implications of any investment specific to any personal
financial situation.

The iCapital model portfolios do not constitute research, are not personalized investment advice. Any alternative investment used in the model portfolio shall be selected by iCapital Advisors, LLC in its sole discretion and is subject to change without notice. The iCapital model portfolios may not be appropriate for all investors, as appropriate investment strategies depend upon the client’s investment objectives. The iCapital model portfolios are not intended to meet the investment objectives or needs of specific individuals or accounts, and it is not intended for individual investor distribution. iCapital is not responsible for determining the appropriateness or suitability of the iCapital model portfolios, or any of the financial products included therein, for any client of a financial professional. Financial professionals and users of the iCapital Platform have the sole responsibility for making their own independent judgement on how to use the iCapital model portfolios and whether an investment is suitable for, or in the best interests of, a client. iCapital is not an adviser to any person who receives information on any of the iCapital model portfolios, and does not have investment discretion over, or place trade orders for, any portfolios or accounts derived from the iCapital model portfolios.

The information and analysis are hypothetical and summary in nature. Certain performance displayed uses hypothetical or simulated performance results that have many inherent limitations, and no representation is being made that any investment account will or is likely to achieve returns similar to those presented. Such hypothetical or simulated performance was not actually achieved by any financial professional or investment portfolio and may not be achieved in the future, and certain performance presented may represent hypothetical performance returns extrapolated for prior periods during which a given asset did not exist or was not investable. Numerous factors, such as the use of assumptions and historical market returns and data, make calculations and analysis uncertain, and there are frequently sharp differences between hypothetical performance results and the actual results achieved by any particular investment program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight or may otherwise reflect a hindsight bias. In addition, hypothetical investments do not involve actual financial risk or the effect that material economic and market factors would have had on actual investment decisions, and no hypothetical investment record can completely account for the impact of actual financial risk in actual investments, such as the ability to withstand losses or adhere to a particular investment program in spite of losses, which can adversely affect actual investment results. There are numerous other factors related to the markets in general or to the implementation of any specific investment program in particular which cannot be fully accounted for in the preparation of hypothetical performance results – all of which can adversely affect actual investment results, and none of which are accounted for in the performance displayed or their resulting data. Performance used or displayed for the purposes of analysis does not account for factors that would impact actual investments, such as the reinvestment of dividends or the deduction of expenses and fees that would be incurred in the management or trading of portfolio assets, including, but not limited to, account fees, custody, trading, brokerage, advisory fees or commissions, as applicable – all of which would reduce performance returns of actual investments. Due to a wide variety of risks and uncertainties, information concerning the iCapital model portfolios, including holdings, performance, and rebalancing, may vary materially from any portfolios or accounts derived from the iCapital model portfolios. Liquidity constraints in the constituents comprising the iCapital model portfolios would also prevent an actual investment program from rebalancing in the same manner as an iCapital model portfolio, which would have a material impact on performance. Past, projected, targeted, or hypothetical performance is not indicative of future results, and there is no guarantee that the iCapital model portfolios or any investment strategy will be successful or achieve any particular level of results, or that substantial or complete losses will be avoided in respect of actual investments.

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Investment Outlook

Private infrastructure includes long-duration investments that aim to provide a mix of cash income and capital appreciation and can play a role in complementing a fixed income allocation. Infrastructure projects are large-scale and tend to have project-specific return elements with revenue tied to usage volume and little sensitivity to price. Given performance is often tied to individual projects, these assets have a longer investment horizon.

An attractive supply and demand environment, in part to a large funding gap, has been drawing interest to the infrastructure opportunity. According to The Work Bank, the projected infrastructure spending to meet societal needs will reach $15 trillion by 2040. Projects tend to be large and expensive with 10-plus year time periods, which is ideal for private market investments. Further, growing public deficits are shifting more financing opportunities to the private sector.

The opportunity is characterized by a push towards renewable energy projects and supportive policies such as the 2022 U.S. Inflation Reduction Act (IRA). Importantly, this is a global trend also affecting Europe and Asia. For example, the NextGenerationEU’s Recovery and Resilience Facility (RRF) is a financing facility geared towards climate transition and digital transition projects for EU Member States.

Infrastructure is not without risks, including financial and operational risks.¹ Because projects have high costs and long payback periods, duration risk exists. Economic growth can also affect GDP-sensitive sectors such as transportation while regulatory hurdles and shifting policy landscapes can be difficult to predict. For example, rather than a single provision, the recently enacted One Big Beautiful Bill Act (OBBBA) includes a series of changes that, on net, scales back parts of the IRA’s energy transition agenda. Most notably, it accelerates the phase-out of clean energy investment (ITC) and production (PTC) tax credits for wind and solar. The earlier phase-out of wind and solar credits may drive a near-term flurry of deal activity through mid-2026.

Recent Market Trends

The interest in infrastructure is backed by strong demand, especially around digital infrastructure and energy transition opportunities. Infrastructure funds raised over $115 billion in the first half of 2025, compared to $102 billion for all of 2024, and are on pace to exceed annual fundraising highs from 2022.² Transaction activity has been lower over the last several years. However, deal activity is improving in 2025 and is on pace to show annual growth from 2024 due in part from larger deals (Exhibit 3).

Globally, we estimate that significant funding gaps exist that will require annual investments of $3.2 trillion in infrastructure assets through 2040 in order to keep pace with global GDP growth.³ This is nowhere more evident than the increase in the electricity and data center demand associated with the rapid development of artificial intelligence (AI). Amazon, Google, Meta, and Microsoft invested roughly $180 billion into data center expansion in 2024, with large portions of these investments earmarked for deals with private market firms to develop energy infrastructure.⁴

Governments are also increasingly using a variety of public-private partnerships to bridge infrastructure funding gaps. In the U.S. alone, there is an estimated $2.9 trillion of cumulative investment need for the period 2020 to 2029, much of which is unfunded.⁵ With so much focus on growing public deficits, many of these projects will likely be funded through the private markets, which currently sit on $350 billion in dry powder.⁶ There are also tactical tailwinds that could support infrastructure. For example, should inflation remain elevated from tariffs enacted by the U.S. administration, fund flows could see support as infrastructure typically outperforms in moderate and high inflation environments.

Industry Focus – Electricity

The increasing appetite for data centers isn’t just affecting traditional and renewable energy demand, but also the need for investment in power and utilities. This includes both the need for more power generation projects as well as grid connection capacity to meet the upcoming demand. Some sources forecast that data centers could account for up to 12% of total U.S. electricity consumption by 2028, from about 4.4% in 2023.⁷ Starting in 2017, the growth of graphic processing unit (GPU)-accelerated servers for AI became such a significant portion of data center usage that it had a material uplift on data center electricity demand.

Upgrading electricity infrastructure is also critical in meeting growing global demand for energy. The World Bank estimates that over 700 million people lack access to electricity, primarily in Sub-Saharan Africa and South Asia.⁸ Elsewhere, outdated grids do not always have the flexibility or capability to successfully integrate high levels of solar power. Smart grids can balance supply and demand, optimize energy flow, and accommodate intermittent sources of energy such as wind and solar. The global push for renewable energy sources requires significant upgrades to successfully integrate these energy sources.

In the interim, developed nations will be reliant on low cost and available power through existing sources. The U.S. is expected to see incremental demand of 3.3 billion cubic feet per day of new natural gas demand by 2030.⁹ New midstream pipeline capacity will be needed to supply further consumption domestically. Separately, European nations maintain the oldest power gids in the world with the majority of supply sourced from hydro, wind, and solar. To create more capacity, modernization of transmission and distribution requires $861 billion of capital investment over the next decade. Furthermore, an added $900+ billion of investment in solar and wind energy projects will be needed to support expected growth to consumption into the 2030s.¹⁰

Performance Snapshot

ENDNOTES

Different types of private infrastructure investments have different risk and return characteristics. See Infrastructure: More Than Just an Inflation Hedge for more.
Infrastructure Q2 2025: Preqin Quarterly Update, Aug. 5, 2025.
iCapital Alternatives Decoded, World Bank’s G20 Global Infrastructure Hub, Oxford Economics
Dell’Oro Group, company reports.
iCapital Alternatives Decoded Q2 2025 based on data from American Society of Civil Engineers.
Preqin, as of Jan. 31, 2025.
Source: Berkeley National Laboratory, 2024 United States Data Center Energy Usage Report.
2024 Tracking SDG 7: The Energy Progress Report, Press release tracking SDG7 2024 World Bank
Source: Goldman Sachs: AI is poised to drive 160% increase in data center power demand
Ibid

ADDITIONAL INFORMATION:

For Exhibit 1, infrastructure investment is defined as new investment, replacement investment and spending on maintenance where the investment will substantially extend the lifetime of an asset but excluding land purchases. The annual global infrastructure investment need through 2040 is a forecast based on the assumption that countries will continue to spend/invest in line with current trends and will match Oxford Economics baseline 2016-40 annual global GDP growth projection of +2.6%. The projected annual global infrastructure investment needed based on society’s needs is based on countries matching the performance of their best performing peers in terms of the resources they dedicate to infrastructure investment. For more information, please refer to the Index Definitions, Attributions, and Important Information sections at the end of this deck.

INDEX DEFINITIONS

Bloomberg Global Aggregate Bond Index: A flagship measure of global investment grade debt from a multitude of local currency markets. This multi-currency benchmark includes treasury, government-related, corporate, and securitized fixed-rate bonds from both developed and emerging markets issuers

EDHEC infra300 Index: The index is a global index that represents the monthly total return of 300 unlisted infrastructure companies and is designed to provide an accurate reflection of the performance of the unlisted infrastructure sector

MSCI ACWI Index: MSCI’s flagship global equity index is designed to represent performance of the full opportunity set of large- and mid-cap companies from developed and emerging markets around the world.

NCREIF Farmland Property Index: The NCREIF Farmland Index is a quarterly time series composite return measure of investment performance of a large pool of individual farmland properties acquired in the private market for investment purposes only.

NCREIF Timberland Property Index: The NCREIF Timberland Index is a quarterly time series composite return measure of investment performance of a large pool of individual U.S. timber properties acquired in the private market for investment purposes only.

Preqin Infrastructure Index: The index covers over 14,000 closed-end funds captured in the broader Private Capital index including funds/strategies listed as Infrastructure core, infrastructure core-plus, infrastructure debt, infrastructure fund of funds, infrastructure opportunistic, infrastructure secondaries, infrastructure value added, as defined by Preqin.

IMPORTANT INFORMAITON

The information contained herein is an opinion only, as of the date indicated, and should not be relied upon as the only important information available. Any prediction, projection, or forecast on the economy, stock market, bond market, or the economic trends of the markets is not necessarily indicative of the future or likely performance. The information contained herein is subject to change, incomplete, and may include information and/or data obtained from third-party sources that iCapital believes, but does not guarantee, to be accurate. iCapital considers this third-party data reliable, but does not represent that it is accurate, complete, and/or up to date, and it should not be relied on as such. iCapital makes no representation as to the accuracy or completeness of this material and accepts no liability for losses arising from the use of the material presented. No representation or warranty is made by iCapital as to the reasonableness or completeness of such forward-looking statements or to any other financial information contained herein.

Investment Outlook

Middle market buyout strategies offer a diverse range of opportunities and are often better protected from macroeconomic uncertainties. One reason: Over 90% of middle market buyout exits are sponsor-to-sponsor or strategic, which provides a more sustainable runway to generate returns as these types of deals are less complex and not as reliant on IPOs or debt financing.

Such strategies should have an opportunity to generate incremental returns due to an expected increase in M&A and exit activity. This optimistic outlook is further supported by a prudent use of leverage which is in-line with historic averages (Exhibit 1). We expect that should debt costs decline, managers will apply incremental leverage, the value of which can be passed on to equity holders.

The middle markets also offer more compelling entry points compared to larger transactions as pockets of value are often present across the large middle market opportunity set (Exhibit 2). Managers that are able to be more selective with purchase price can then pursue more exit options without a dependency on higher valuation as part of the exit strategy. Median entry valuations (EV/EDITDA) for deals below $1 billion are about 17% lower than those above $1 billion (Exhibit 2).

The valuation gap reflects greater inefficiencies and less intermediated deal sourcing that is typical of the middle market, which continues to be a structural advantage for experienced managers with strong origination networks.

Recent Market Trends

Over the past several years, the similar factors that have affected the overall private equity market also affected middle market buyout deals, although to a lesser degree. The cost of financing new deals increased, leverage ratios contracted, and loan-to-value ratios declined.

With middle market strategies less impacted from headwinds, there has been a steady level of sponsor engagement and capital deployment, suggesting that general partners (GPs) are finding viable entry points (Exhibit 3). Reasons that middle market strategies have been resilient include 1) the majority of deal flow in the aggregate buyout space should occur in the middle-market purely due to the opportunity size to source deals—there are nearly 200,000 middle market businesses representing one-third of private sector GDP in the U.S. 2) Middle market managers have more pathways to exit with less complex deals relative to large transactions. And 3), new deals are not overly dependent on debt.

Performance Snapshot

Small and middle market private equity historically provided investors with compelling risk-adjusted returns. Compared to other private equity strategies, they tend to offer lower volatility and higher annualized performance. This makes them interesting additions to a comprehensive private equity portfolio.

National Center for the Middle Market, with data based on availability as of August 2025.

ADDITIONAL INFORMATION:

For all exhibits: Private Equity proxied by Preqin Private Equity excluding Venture Index which includes Balanced, Buyout, Secondaries, and Turnaround strategies within Private Equity, per Preqin. Buyout (Broad) proxied by Preqin Private Equity Buyout Index and includes Small, Mid, and Large Buyout Strategies, per Preqin. Buyout (Mid) proxied by Preqin Private Equity Buyout Mid Index. Buyout (Small) proxied by Preqin Private Equity Buyout Small Index. Growth Equity proxied by Preqin Growth Equity Index. Secondaries proxied by Preqin Secondaries Index. U.S. Equity proxied by S&P 500 Total Return Index. Global Equity proxied by MSCI ACWI Net Total Return USD Index. Global Bond proxied by Bloomberg Global Aggregate Index. Global 60/40 proxied by 60% MSCI ACWI Net Total Return USD Index and 40% Bloomberg Global Aggregate Index.

INDEX DEFINITIONS

Preqin Growth Equity Index: The index covers closed-end funds captured in the broader Private Capital index including funds/strategies listed as Growth, as defined by Preqin.

Preqin Private Equity Buyout Index: The index covers closed-end funds captured in the broader Private Capital index including funds/strategies listed as Buyout, as defined by Preqin.

Preqin Private Equity Buyout (Mid): The index covers closed-end funds captured in the broader Private Capital index including funds/strategies listed as mid-market as defined by Preqin including those with capital commitments between $501M and $1.5B for vintage years 2005–present; $301M to $750M for vintages 1997–2004; and $201M to $500M for vintages 1992–1995.

Preqin Private Equity Buyout (Small): The index covers closed-end funds captured in the broader Private Capital index including funds/strategies listed as mid-market as defined by Preqin including those with capital commitments of $500M or less for vintage years 2005–present; $300M or less for vintages 1997–2004; and $200M and less for vintages 1992–1995.

Preqin Secondaries Index: The index covers closed-end funds captured in the broader Private Capital index including funds/strategies listed as Secondaries (PE), as defined by Preqin.

S&P 500 Index: The S&P 500 is widely regarded as the best single gauge of large-cap U.S. equities. The index includes 500 of the top companies in leading industries of the U.S. economy and covers approximately 80% of available market capitalization.

IMPORTANT INFORMAITON

The information contained herein is an opinion only, as of the date indicated, and should not be relied upon as the only important information available. Any prediction, projection, or forecast on the economy, stock market, bond market, or the economic trends of the markets is not necessarily indicative of the future or likely performance. The information contained herein is subject to change, incomplete, and may include information and/or data obtained from third-party sources that iCapital believes, but does not guarantee, to be accurate. iCapital considers this third-party data reliable, but does not represent that it is accurate, complete, and/or up to date, and it should not be relied on as such. iCapital makes no representation as to the accuracy or completeness of this material and accepts no liability for losses arising from the use of the material presented. No representation or warranty is made by iCapital as to the reasonableness or completeness of such forward-looking statements or to any other financial information contained herein.

Securities products and services are offered by iCapital Markets, a SEC-registered broker-dealer, member FINRA and SIPC, and an affiliate of iCapital, Inc. and Institutional Capital Network, Inc. These registrations and memberships in no way imply that the SEC, FINRA, or SIPC have endorsed any of the entities, products, or services discussed herein. Annuities and insurance services are provided by iCapital Annuities and Insurance Services LLC, an affiliate of iCapital, Inc. “iCapital” and “iCapital Network” are registered trademarks of Institutional Capital Network, Inc. Additional information is available upon request.

Key Takeaways

Secondaries can provide liquidity for existing investors and new access points for buyers into seasoned private market assets.
Secondaries are increasingly used by GPs as a tool to actively manage and rebalance portfolios.
Secondaries can provide a mitigated J-curve, limit blind pool risk and offer a faster return of capital.
The private secondaries market has grown quickly and should follow the path of primary private markets capital formation.

Private markets secondary funds—known as “secondaries”—help enable the buying and selling of pre-existing stakes in private market funds. These transactions can be initiated by investors (LP-led) or asset managers (GP-led) and may involve direct or brokered deals. For buyers, secondaries offer access to more mature investments and the potential for faster returns.

How Secondaries Work

Growth in the secondaries market is a natural evolution of the growth in primary private market assets. Secondaries transactions provide liquidity for investors and allow asset managers to tactically rebalance their portfolios. Secondaries funds are dedicated investment funds that purchase these pre-existing commitments from limited partners (LPs) seeking to exit primary private equity funds before they are fully liquidated

Secondaries are characterized through two main transaction types:

LP-led transactions (limited partner): The most traditional type of secondary has been the LP-led transaction, where an LP in a fund seeks an early exit and sells its interests. Buyers are typically other existing LPs in the fund, new investors, or dedicated secondary funds.
GP-led transactions (general partner): These transactions involve a GP transferring a single or a few companies to a new investment fund (a continuation fund). In a GP-led transaction, the current LPs of the original fund are given the option to cash out or roll over their interests into a new vehicle, which typically also admits new LPs. This effectively extends the timeline the GP owns the interests, allowing more time for asset appreciation.

These transactions can be complex and involve different vehicles including continuation funds, dedicated secondaries funds or fund-to-fund transfers.

Benefits of Secondary Funds

Quicker Returns & J-Curve Mitigation: Secondary strategies deploy capital faster and distributions typically begin quickly, mitigating the private market J-curve.
Discounted Pricing: Secondary stakes often trade at a discount to net asset value (NAV) offering potential upside.
Greater Diversification: Investors can gain exposure across multiple funds, vintages, sectors, geographies, and managers.
Reduced Blind Pool Risk: Buyers know the fund’s underlying assets ahead of investment, allowing for more informed decisions.

Implementation Insight: A secondary fund can deploy capital faster and offer access to more mature assets and faster distribution ideal for shorter investment horizons.

Key Risk Considerations

Liquidity & Market Conditions: Secondaries may still be less liquid than the public markets where deal activity can be influenced by broader capital market trends.
Pricing Dynamics: The ability to exit private markets investments early has historically come at a price to sellers as secondary fund managers aim to buy pre-existing interests in funds at a discount to their net asset value (NAV). Discounts may not always exist.
Continuation Fund Complexity: GP-led continuation deals may involve conflicts of interest or be used to prolong underperforming assets. Close due diligence is essential.

Implementation Insight: Not all discounts are created equal—some reflect opportunity, others can signal stress in the market. Understanding the underlying assets is key.

Secondaries: Myth vs. Fact

Myth	Fact
Secondaries always trade at a real discount	The ability to access private market exposure at a discount is a benefit to buyers. It’s important to note that discounts may not always exist and vary by asset class.
Secondary investing lacks transparency	Buyers can gain more visibility into the portfolio or individual investment—in contrast to blind pool risk of a primary fund.
Only LPs sell secondaries	GP-led continuation and recapitalization deals are common as portfolio rebalancing tools.

IMPORTANT INFORMATION

This material is provided for informational purposes only and is not intended as, and may not be relied on in any manner as, legal, tax or investment advice, a recommendation, or as an offer or solicitation to buy or sell any security, financial product or instrument, or otherwise to participate in any particular trading strategy. This material does not intend to address the financial objectives, situation, or specific needs of any individual investor. You should consult your personal accounting, tax and legal advisors to understand the implications of any investment specific to your personal financial situation.

The information contained herein is an opinion only, as of the date indicated, and should not be relied upon as the only important information available. Any prediction, projection or forecast on the economy, stock market, bond market or the economic trends of the markets is not necessarily indicative of the future or likely performance. The information contained herein is subject to change, incomplete, and may include information and/or data obtained from third party sources that iCapital believes, but does not guarantee, to be accurate. iCapital considers this third-party data reliable, but does not represent that it is accurate, complete and/or up to date, and it should not be relied on as such. iCapital makes no representation as to the accuracy or completeness of this material and accepts no liability for losses arising from the use of the material presented. No representation or warranty is made by iCapital as to the reasonableness or completeness of such forward-looking statements or to any other financial information contained herein.

ACA#791930 08/25

Key Takeaways

Infrastructure funds aim to provide investors with stable, consistent income with the potential for capital appreciation.
Infrastructure’s ability to pass through cost increases offers potential inflation protection and low correlation to traditional equities and bonds.
Long-term demand is fueled by growing public deficits, digital transformation, energy transition and advancing energy independence.
Private infrastructure spans sectors and themes like transportation, utilities, energy, climate transition and digital networks.
The asset class presents a high-coupon inflation-protected long duration investment with limited downside.

Private infrastructure funds aim to provide investors with a mix of cash income and capital appreciation and can play a role in complementing a fixed income or real asset allocation.

Infrastructure assets are broadly defined as the basic physical structures and facilities (buildings, roads, and power supplies) needed for the operation of a society or enterprise. Major subsectors include social infrastructure (schools and hospitals); utilities (gas and water systems); transportation (toll roads and airports); and energy infrastructure (power generation).

Infrastructure is one of the few asset classes with characteristics that allow it to not only mitigate the effects of inflation, but also to potentially benefit from increases in prices and interest rates.

How Infrastructure Works

Infrastructure projects have long lifespans involving multiple stages from project identification, design and development, implementation and construction, operations and maintenance, exit and divestment.

Investments vary in structure, strategy, and risk level and are typically classified by project development stage.

Greenfield – Projects that do not currently exist but are in development or under construction. Capital costs include the building of the infrastructure asset as well as costs to maintain it once it is operational.
Brownfield – Projects that are already operating on a standalone basis or undergoing expansion.

They’re also classified by risk/return profile, ranging from income-generating, stable assets to higher-risk opportunities focused on growth or repositioning. Geography also matters, with different return expectations and regulatory dynamics in developed vs. emerging markets.

Common Infrastructure Categories

Private credit comes in different forms, each with its own level of risk and return. Here’s a quick look at some of the most common strategies:

Strategy	Profile	Example Sectors	Structure and Revenue Drivers
Core	Most stable, income-focused, lower risk	Regulated utilities, mature toll roads	Long-term contracts with government entities. Regulated rates
Core Plus	Moderate risk due to some variability to cash floes. Returns driven by income with some potential for capital appreciation	Midstream energy, transportation (e.g., toll roads, airports) digital infrastructure	Long-term contracts with creditworthy private entities. Additional revenue arrangements tied to volume.
Value Add	Higher risk; returns tied more to capital-appreciation.	Transportation with revenue tied to volume, early-stage midstream energy, assets repositioning for newfound growth.	A mix of long-term contracts on greenfield and/or short-term contracts with less creditworthy entities. Revenue reliant on greenfield or GDP growth.
Opportunistic	Highest risk/return	Infrastructure in developing markets, renewables or new technology	Could include contracts in non-OECD countries or unsecured future contracts. Revenue visibility could be less predictable and erratic.

Benefits of Infrastructure

Yield – Many assets generate reliable, contract-based income.
Diversification – Low correlation to equities and bonds can improve overall portfolio resilience.
Capital Appreciation – Operational improvements and asset expansion can drive long-term value.
Inflation Protection – Costs are often passed through, offering protection in an inflationary environment. In addition, infrastructure assets are typically large projects with costly new-construction expenses that increase in lockstep with supplies and labor, increasing replacement cost.

Implementation Insight:
Infrastructure may provide useful diversification as part of a fixed income and/or real assets allocation, especially in volatile or rising-rate environments.

Key Risk Considerations

Duration – infrastructure projects often have high initial capital costs and long payback periods, presenting duration risk.
Complexity – Regulatory oversight, project execution, tax implications and jurisdictional risk can impact outcomes.
Manager Selection – Experience, sector specialization, sourcing capabilities, and operating expertise vary widely across managers.

Implementation Insight:
Investors should be prepared to commit capital for 10-plus years and evaluate manager track records carefully, especially in niche or emerging sectors.

Infrastructure: Myth vs. Fact

Myth	Fact
Infrastructure is only about roads and bridge	It includes renewables, data centers, utilities, and social infrastructure.
It’s too risky for conservative portfolios	Core strategies offer stable, regulated cash flows with downside protection.
Only governments invest in infrastructure	Private capital plays a growing role across sectors and geographies.
Infrastructure doesn’t offer growth	Value-add and opportunistic strategies target capital appreciation through development and operational upside.

IMPORTANT INFORMATION

This material is provided for informational purposes only and is not intended as, and may not be relied on in any manner as, legal, tax or investment advice, a recommendation, or as an offer or solicitation to buy or sell any security, financial product or instrument, or otherwise to participate in any particular trading strategy. This material does not intend to address the financial objectives, situation, or specific needs of any individual investor. You should consult your personal accounting, tax and legal advisors to understand the implications of any investment specific to your personal financial situation.

The information contained herein is an opinion only, as of the date indicated, and should not be relied upon as the only important information available. Any prediction, projection or forecast on the economy, stock market, bond market or the economic trends of the markets is not necessarily indicative of the future or likely performance. The information contained herein is subject to change, incomplete, and may include information and/or data obtained from third party sources that iCapital believes, but does not guarantee, to be accurate. iCapital considers this third-party data reliable, but does not represent that it is accurate, complete and/or up to date, and it should not be relied on as such. iCapital makes no representation as to the accuracy or completeness of this material and accepts no liability for losses arising from the use of the material presented. No representation or warranty is made by iCapital as to the reasonableness or completeness of such forward-looking statements or to any other financial information contained herein.

ACA#791952 08/25

Key Takeaways

Direct lending is a core strategy of private credit, focused on loans to private companies—primarily in the middle market.
Loans are typically senior secured, offering strong downside protection.
Floating-rate structures help manage interest rate risk.
Direct relationships and deep due diligence allow for greater access and control over terms and structure.
Investors benefit from enhanced yield, downside protection, and portfolio diversification.

Direct lending is a form of private credit where non-bank lenders provide loans directly to private companies. In most cases, lenders focus companies seeking a tailored financing solution that is not accessible to them in the public credit markets or through bank lenders.

This type of lending is distinct from the traditional sources of debt capital for corporate borrowers, namely bank loans and broadly syndicated loans. Like syndicated loans (but unlike most high-yield bonds), these private loans typically feature interest payments at a spread above a floating reference rate and a floor on the minimum rate, reducing interest-rate risk for investors and providing protection in an inflationary environment.

Borrowers value the speed and flexibility. Investors benefit from higher yields, downside protection, and  low correlation to public markets—making it a compelling fixed income strategy.

How Direct Lending Works

Direct lending is a relationship-based lending model focused on middle market companies. The process typically includes:

Capital Raise – Funds are raised from institutional and high-net-worth investors.
Deal Sourcing – Managers find lending opportunities, often from private equity sponsors needing debt for acquisitions.
Due Diligence & Negotiation – Managers research borrowers and negotiate terms, including protections like covenants and collateral.
Loan Management – The lender holds the loan, monitors performance, and works directly with the borrower.

This direct approach offers speed, flexibility, and control—benefiting both borrowers and investors.

Private credit offers more lender protections than public credit. Unlike public loans, which often have fewer restrictions, private loans typically include stronger terms, more direct oversight, and tighter controls—helping reduce risk for investors.

Public vs. Private Credit Structures

Public			Private
	Investment Grade	High Yield	Broadly Syndicated Loans (BSL)	Direct Lending
Borrower Size	Mega	Large	Large	Typically, Middle Market
Default Risk	Low	High	Medium	Typically, Low to Moderate
Interest Rate Risk	Medium/High (Fixed Rate)	Medium/High (Fixed Rate)	Low (Floating Rate)	Low (Floating Rate)
Due Diligence	Limited	Limited	Limited	Extensive
Covenants	Strong	Weak	Weak	Strong
Monitoring Rights	Weak	Weak	Limited	Strong

Source: iCapital. For illustrative purposes only.

Benefits of Direct Lending

Enhanced Yield: Investors often earn a 300–500 bps premium over public credit due to leverage, illiquidity and demand.¹
Downside Protection: Senior secured structure, strong covenants, and hands-on monitoring support lower default rates and higher recoveries.
Inflation Protection: Floating-rate loans adjust with interest rates, preserving real returns.
Diversification: Low correlation to stocks and bonds improves portfolio resilience.
Private Market Access: Exposure to a much broader universe of private companies not accessible through public markets
Implementation Insight: Institutional investors seeking to compliment traditional fixed income allocations may use direct lending to enhance yield and reduce volatility.

Key Risk Considerations

Illiquidity: Direct lending investments are less liquid than publicly traded investments.
Manager Selection: Not all managers are the same—thorough due diligence is essential.
Cyclical Risk: The direct lending market, at it’s current size, has not experienced a prolonged period of credit stress.
Regulatory Risk: Policy changes could impact borrower demand or fund structures.

Implementation Insight: Because direct lending vehicles are less liquid than their public counterparts, investors should align these allocations with longer-term investment horizons.

Direct Lending: Myth vs. Fact

Myth	Fact
Direct lending is too risky	Most loans are senior secured with strong covenants and due diligence.
Only institutions can invest	Access is expanding via feeder funds and private vehicles for high-net-worth investors.
It’s illiquid	Direct lending is less liquid than public investments but may be offered through business development companies (“BDCs”) and interval fund structures
It’s just like high-yield bonds	Direct lending is typically senior, directly negotiated, and covenant-rich.

1. Bloomberg Index Services Limited, Cliffwater Direct Lending Index, Morningstar, iCapital Alternatives Decoded

IMPORTANT INFORMATION

This material is provided for informational purposes only and is not intended as, and may not be relied on in any manner as, legal, tax or investment advice, a recommendation, or as an offer or solicitation to buy or sell any security, financial product or instrument, or otherwise to participate in any particular trading strategy. This material does not intend to address the financial objectives, situation, or specific needs of any individual investor. You should consult your personal accounting, tax and legal advisors to understand the implications of any investment specific to your personal financial situation.

The information contained herein is an opinion only, as of the date indicated, and should not be relied upon as the only important information available. Any prediction, projection or forecast on the economy, stock market, bond market or the economic trends of the markets is not necessarily indicative of the future or likely performance. The information contained herein is subject to change, incomplete, and may include information and/or data obtained from third party sources that iCapital believes, but does not guarantee, to be accurate. iCapital considers this third-party data reliable, but does not represent that it is accurate, complete and/or up to date, and it should not be relied on as such. iCapital makes no representation as to the accuracy or completeness of this material and accepts no liability for losses arising from the use of the material presented. No representation or warranty is made by iCapital as to the reasonableness or completeness of such forward-looking statements or to any other financial information contained herein.

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