A well-argued piece that contains various questions people who recommend private credit to their clients should answer well before they actually take actions. I often ask why private credit is so hot in demand now in private wealth now and the answer I get is clients want private credit; but don’t the clients understand these things are marked to model and not perform well vs public markets after the hefty fees, let alone their investments are locked up.
Sadly, this is exactly how all alternative asset class cycles play out. First, a void appears in the capital markets for a legitimate reason, (2) early capital providers produce exceptional returns, (3) followers flood the market with capital and most investors get disappointing results. It is just as true for private credit investors today as it was for whaling investors in the 1800s.
A well-argued piece that contains various questions people who recommend private credit to their clients should answer well before they actually take actions. I often ask why private credit is so hot in demand now in private wealth now and the answer I get is clients want private credit; but don’t the clients understand these things are marked to model and not perform well vs public markets after the hefty fees, let alone their investments are locked up.
Sadly, this is exactly how all alternative asset class cycles play out. First, a void appears in the capital markets for a legitimate reason, (2) early capital providers produce exceptional returns, (3) followers flood the market with capital and most investors get disappointing results. It is just as true for private credit investors today as it was for whaling investors in the 1800s.