Private credit will grow as an alternative asset class

Significance

In the current low-interest-rate environment, private debt and other alternative assets have become a key part of investors’ portfolios given their attractive risk-adjusted returns. Private credit accounts for 10-15% of assets under management (AUM) within private markets.

Impacts

• The relatively low volatility of the private credit market should remain attractive in current market conditions.
• Illiquidity could become less of an issue as more investors desire secondary market trading.
• Lending standards could fall given the sheer amount of capital entering the asset class, including a broader base of investors.