Private equity and credit are set to outperform publicly-traded assets in the aftermath of the Covid-19 pandemic as investors looking to take advantage of market dislocations pile in, according to $68 billion alternative investment manager Hamilton Lane.

“Investors have recognized that the greatest periods of outperformance in the private markets relative to public markets are as you’re going through and coming out of a downturn,” Andrew Schardt, the firm’s head of direct credit, said in an interview.

Private credit vehicles raised $57 billion in the first half of the year, buoyed by appetite for distressed strategies, according to research firm Preqin. Still, the opportunities has been limited thus far, in part due to the Federal Reserve’s unprecedented efforts to shore up liquidity. Second half earnings may shed light on whether there will be more deterioration that could lead to attractive investments, according to Schardt.

“One of the challenges on the distressed side has been that if you’re too early, you’re wrong,” he said. “So it’s a fine line of balancing how you’re going to approach the market and the opportunity recognizing you need to have the capital ready to go, but be patient.”

Uncertainty caused by the coronavirus outbreak may end up pushing private-debt dynamics in favor of lenders going forward, Schardt said. The asset class’s longer-term investment approach relative to public debt may also help boost returns as companies struggle to bounce back.

“You can have some more positives in more difficult and challenging times as a lender,” Schardt said. “There’s a pendulum that swings between borrower-friendly structures and terms and more lender-friendly terms, structures and pricing.”