How does private credit compare to other fixed income instruments or bonds?

Unlike traditional bond funds, private credit gives you access to privately negotiated loans that are not traded in public markets. These loans often offer higher yields and risk management due to their collateral and position in the capital structure, such as with senior secured private credit (highest seniority). However, they also typically come with restricted liquidity and lock-up periods compared to public market instruments.- Higher yield potential: because private loans are less liquid and use tailor-made contracts, they often pay a premium.

- Risk management through seniority structure: Private credit includes loans that are provided to companies at varying risk levels and therefore provide varying return profiles as well. This is called a seniority structure. Senior secured private loans sit at the top of the capital structure for priority repayment, offering a layer of protection in the rare event of a default.  

- Low correlation to public markets: Private credit typically has a low correlation to public markets, which helps diversify your portfolio and reduces overall volatility. Unlike public bonds, private credit instruments are not traded on exchanges and are therefore not marked-to-market daily — this results in more stable returns that are less affected by short-term market swings.

- Restricted liquidity: Unlike public bond funds, private credit products have traditionally come with multi-year lock-ups ranging from 3-10 years.