Private Credit's Role in Advisor Toolkit

PARAGRAPH 1 --- What happened: Phil Huber, Managing Director at Cliffwater, discussed private credit's role in advisors' toolkits at the Basis Northwest conference. He highlighted direct lending's appeal for its stable returns and lower volatility. Meanwhile, alternative asset managers are set to benefit as private credit enters 401(k) plans, historically accessible only to high-net-worth investors and institutions. Citi's Andrew James noted increased demand for private markets access in wealth management.

PARAGRAPH 2 --- Market impact: This narrative drives growth in private credit investments, benefiting alternative asset managers like Ares Management, Blackstone's GSO Capital Partners, and KKR. It exposes retail investors to private credit's illiquidity and higher fees, potentially increasing demand for actively managed funds. The shift may also pressure public market valuations as capital flows into private markets.

PARAGRAPH 3 --- What to watch next: In Q2 2023, monitor Ares Management's (ARES) and Blackstone's (BX) earnings for insights into private credit demand and performance. Track regulatory updates on the expansion of private credit into 401(k) plans, with a key date being the Department of Labor's expected guidance in late 2023. Additionally, watch the iShares Global Corporate Bond ETF (IGCB) for signs of capital flow shifts between public and private markets.