Portfolio Finance

Portfolio Finance: 101

October 2025 – 2 min watch

In this animated explainer video, we unpack what portfolio finance is, why it’s gaining traction, and how it’s helping investors tap into private markets with flexibility, diversification, and downside protection.

 

Over the last decade, private markets have grown at rapid speed, but bank capital hasn’t kept up. This has created a funding gap—and with it, a potentially compelling opportunity in portfolio finance.

What is Portfolio Finance?


Portfolio finance offers an alternative way to fund private market portfolios. It’s part of the broader fund finance universe, sitting between traditional subscription line financing and higher-risk preferred or equity-like strategies. “Core” portfolio finance delivers investment-grade financing solutions to diverse portfolios of private market assets.

How is it used?

  • In private credit and real estate debt, it can increase a manager’s buying power, potentially enhance returns, and attract new investors seeking customized exposures.
  • In secondaries, it’s used as a portfolio management tool and may help close the bid-ask spread between buyers and sellers.
  • In GP financing, it provides capital for fund managers to scale their businesses and align more closely with LPs. It also supports portfolios that include a number of GP stakes strategies.

Why is it gaining traction among investors?


Portfolio finance can serve as a diversifier and enhancement to traditional fixed income allocations. With investment-grade ratings, seniority, and diversified collateral, it offers capital preservation with the potential for attractive risk-adjusted returns. It can also deliver structural alpha and has historically offered a spread pick-up over public investment-grade credit.

Looking Ahead


Private markets are projected to reach or exceed $20 trillion by the end of the decade. Portfolio finance is expected to play a central role in this evolution—opening new doors for investors and enabling capital to be deployed quickly into private markets.

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Headshot of Dadong Yan smiling at the camera.

Dadong Yan

Head of Portfolio Finance

Important Information

The document is for informational purposes only and is not an offer or solicitation for the purchase or sale of any financial instrument or service. The material herein was prepared without any consideration of the investment objectives, financial situation or particular needs of anyone who may receive it. This document is not, and must not be treated as, investment advice, investment recommendations, or investment research.

In making an investment decision, prospective investors must rely on their own examination of the merits and risks involved and before making any investment decision, it is recommended that prospective investors seek independent investment, legal, tax, accounting or other professional advice as appropriate.

Unless otherwise mentioned, the views contained in this document are those of Barings. These views are made in good faith in relation to the facts known at the time of preparation and are subject to change without notice. Parts of this document may be based on information received from sources we believe to be reliable. Although every effort is taken to ensure that the information contained in this document is accurate, Barings makes no representation or warranty, express or implied, regarding the accuracy, completeness or adequacy of the information.

Forecasts in this document reflect Barings’ market views as of the preparation date and may change without notice. Projections are not guarantees of future performance. The value of investments and any income may fluctuate and are not guaranteed by Barings or any other party. Examples, portfolio compositions, and investment results shown are for illustrative purposes only and do not predict future outcomes. Actual investments may differ significantly in size, composition, and risk. No assurance is given that any investment will be profitable or avoid losses. Currency exchange rate fluctuations may impact investment value.

Investments involve risks, including potential loss of principal. Past performance is not indicative of future results. Investors should not only base on this document alone to make investment decision.

This document is issued by Baring Asset Management (Asia) Limited. It has not been reviewed by the Securities and Futures Commission of Hong Kong.

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