(Bloomberg) -- The private-market boom is set to get a fresh lease on life in the event the Federal Reserve slashes interest rates – refueling the global hunt for yield along the way, according to the Asia-Pacific head of BlackRock Inc.

While the investment manager is a believer in the higher-for-longer monetary era, BlackRock says the search for alternative income-generating strategies is all the rage among clients across geographies.

“If rates do go down, the search for income becomes even more prevalent and that’s an area where I think private markets will continue to play a long-lasting support to our client base,” Susan Chan, senior managing director and head of Asia Pacific at BlackRock, said in the pilot episode of Tiger Money, a Bloomberg podcast.

Despite beefy yields on offer in public markets, investors continue to flock to private equity and debt. Industry assets continued to grow by 12% to $13.1 trillion as of June 2023, according to a McKinsey report published in March. 

Last year, the asset manager rolled out the BlackRock Private Credit Fund, which targets mom-and-pop investors while vowing to keep “an eye on risk.” Dubbed BDEBT, the fund primarily makes floating-rate loans to middle-market and private US companies.

“There are great opportunities to invest and to generate the yields or the income that our clients might be looking for when they assess how they should be creating their portfolios over the long-run,” Chan added. “This is an area where this part of the world in particular our clients have always looked for income.”

Elsewhere, the BlackRock APAC head is also bullish on the growth of exchange-traded funds in the region, particularly in Japan. Year-to-date, flows into Japanese ETFs stand at nearly $15 billion, already more than 2022 and 2021 combined, data compiled by Bloomberg Intelligence show. 

BlackRock has deepened its Japan push with new ETF launches over the past year. The firm is now the fifth-largest issuer of its kind in the Asian nation, according to BI data.

“We’re seeing a demand for locally listed ETFs and we see that in Japan,” she said, despite some challenges like retrocession fees, or commissions paid to advisers for putting client money in particular funds. “We’ve seen great adoption across the region.”

Read more: BlackRock Says Japanese Stocks Can ‘Best Their All-Time Highs’

--With assistance from David Ingles, Rebecca Sin and Silla Brush.

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