May 29, 2026 by Alternatives Watch
Alternatives Watch sat down with Pete Alliegro, CIO with Sagient, a Los Angeles-based wealth management firm, as part of the series to better understand the issues and trends investment CIOs expect to impact the second half of 2026 and beyond.
Alliegro has more than 25 years of experience in wealth management, portfolio management, and institutional investing. Prior to joining Sagient earlier this year, he served as director of business development at SteelPeak Wealth and CIO for The Shadden Group, a $4 billion private wealth management team at Morgan Stanley. A Chartered Financial Analyst charterholder with an MBA in Finance, he has held senior portfolio management and business development roles at U.S. Trust, Research Affiliates, Nuveen Asset Management, and Wilshire Associates.
As part of this series, Alternatives Watch presented Alliegro with the same questions asked of all the CIOs interviewed.
Here are his answers:
AW: Looking back on the first half of this year, what major trends interest you most within the alternative investments space?
Pete Alliegro: The private credit space has reached a critical juncture. While AUM has surged past $2 trillion, the first half of the year highlighted a growing tension between investor demand for liquidity and the illiquid nature of the underlying loans. Redemption caps have been a significant issue here. Major players had to enforce 5% redemption caps after Q1 requests far exceeded available liquidity. Additionally, to avoid defaults in a “higher-for-longer” environment, payment-in-kind (PIK) arrangements have more than doubled. Borrowers are essentially deferring cash interest and adding it to the principal, which preserves cash flow today but adds long-term risk to portfolios.
I’ve also noticed that tax policy has served as a catalyst in the alts space. The passage and implementation of the One Big Beautiful Bill Act (OBBBA) have created specific tailwinds for private markets. The act introduced a 30% step-up in cost basis for investments in Rural Opportunity Zones after five years. By making full expensing for equipment permanent, OBBBA has bolstered the “real assets” sector, particularly in logistics and domestic manufacturing.
Finally, real estate is heating up again, with institutional buyers finally stepping in, often acquiring assets at 20–25% below peak values.
AW: Where do you see the biggest opportunities and risks within the market for the second half of the year?
PA: Qualified Rural Opportunity Funds (QROFs): While not that highly publicized, OBBBA has made this a standout tax-efficiency play. The 30% basis step-up after five years, triple the urban benefit of 10%, combined with the lower 50% improvement threshold, compared to the 100% standard threshold, makes this very attractive.
As I mentioned above, I believe real estate will begin to recover. Certain assets have repriced by 20–25% over the past three years. While demand remains high for buildings in prime locations, these lower valuations may spur more conversions of less desirable properties to residential and other uses.
The AI buildout and related power needs are a huge tailwind for infrastructure. With historically stable returns during inflation regimes, which will likely be with us for the foreseeable future, and backed by multi-year cash flows, infrastructure should remain very desirable.
As for risks, I believe we aren’t done dealing with private credit. The negative headlines are not noise; they reflect genuine late-cycle stress in specific corners of the market. However, they are not a reason to abandon the asset class. Manager selection matters enormously here: a manager’s expertise, underwriting discipline and risk management approach can dramatically influence outcomes. Particular attention should be paid to PIK ratios.
AW: Considering continued geopolitical uncertainty and its particular impact on energy prices, how do you see the evolving role of alternatives within more traditional allocations for the rest of this year?
PA: Infrastructure and real assets remain especially attractive because many offer inflation-linked cash flows and long-term contractual revenue streams. Investors continue to allocate capital to energy infrastructure, utilities, pipelines, grid modernization, battery storage and LNG projects as energy security becomes a global priority alongside the energy transition.
While I believe it’s a significant risk, private credit is playing a larger role within traditional allocations. Higher interest rates and tighter bank lending standards have created opportunities for private lenders to provide customized financing with attractive yields and floating-rate income.
Tangible assets such as infrastructure, farmland, timber and selective real estate sectors may provide pricing power and diversification during periods of macroeconomic stress. Gold has also regained importance as both an inflation hedge and a geopolitical risk diversifier.
With greater emphasis on resilience, liquidity management and durable cash flows, alternatives are becoming key components of diversified portfolios.
