US advisors bullish on private credit
Financial advisors in the US are overwhelmingly convinced about private credit, new research has found, with 80 per cent already allocating to the asset class or planning to make their first investment this year.
A survey of 121 professionals from registered investment advisors (RIAs), commissioned by investment manager Alternative Fund Advisors, also found that 82 per cent plan to increase allocations to private credit, with many adding new funds.
The survey suggests that firms are likely to increase diversification within private credit this year, both in terms of the number of funds and types of strategies.
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40 per cent of respondents plan to add at least one new fund to existing private credit portfolios in 2025, while 36 per cent are considering it.
When it comes to adding strategies, multi-sector funds were the most popular choice (cited by 57 per cent of firms), followed by asset-based lending (39 per cent) and real estate debt (36 per cent).
“Digging deeper into the data, it appears that new allocations to the strategy fall into two camps: those that seek an all-in-one allocation and those that prefer an unbundled approach,” the analysis said. “Multi-strategy funds tend to appeal more to firms that currently own two or fewer funds, and less to firms that already own three or more funds.”
Direct lending came in at a relatively low 32 per cent, which the analysis attributed to the fact that direct lending dominates current allocations so tends to be less popular as a 2025 addition.
“We believe the importance of private credit in client portfolios will only increase in 2025 and beyond,” said Marco Hanig, chief executive and co-founder of Alternative Fund Advisors. “Our survey findings validated a trend that we’re seeing in the market –firms have moved beyond owning a single private credit fund. They are now utilizing multiple funds and intentionally diversifying across various sub-segments of the market.”
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Alternative Fund Advisors is the investment manager of the AFA Asset Based Lending Fund, a closed-end interval fund with $240m (£182.3m) in assets.
The wealth market is increasingly waking up to the opportunities presented by private markets, for diversification and lucrative returns.
Earlier this week, a survey by Blackstone’s private wealth solutions group found that 81 per cent of advisors plan to introduce private markets to clients who have not yet allocated to them, over the next 12 months.
For income-oriented client portfolios, a majority of advisors (60 per cent) said they already allocate at least five per cent to private credit.
