The role of private credit in a diversified HNW portfolio: Spotlight on bridging loans
As high-net-worth investors (HNWIs) around the world increasingly seek out alternatives to volatile public markets and low-yielding cash deposits, private credit — particularly bridging loans — is emerging as a strategic asset class of interest. Once overlooked or misunderstood, bridging loans are now gaining traction among wealth managers and HNWIs as a low-duration, asset-backed investment that delivers attractive risk-adjusted returns.
The growth of private credit
Typically secured against UK property, bridging loans offer capital preservation and strong yields, with annualised returns in the range of between 8-12 per cent. For instance, Somo currently offers returns of up to 13.2 per cent per annum and the platform has averaged an annual return of 10.99 per cent since its 2014 inception. This is in contrast to traditional fixed income products, which averaged 3.6 per cent in 2023 (Bloomberg Global Aggregate Index). With repayment timelines generally within 12 months, bridging loans also provide liquidity without the long lock-up periods of private equity or infrastructure funds.
Evolving investor attitudes are evident in investment flows. According to Preqin, global allocations to private credit hit a record $1.6tn (£1.2tn) in 2024, with HNW and family office interest accounting for a growing share. In the UK, Somo has seen a 40 per cent rise in investor enquiries since 2022, indicating increasing comfort with this once-niche asset class and the firm’s founder and chief executive Louis Alexander (pictured) takes heart from this progress.
“The appetite we’re seeing from HNW investors is a very interesting development,” says Louis. “One of the key characteristics that differentiates HNW investors from retail investors is the fact the latter is much stickier – they do their research, speak to peers, weigh up historical risk and reward and that means once commitments are made to certain asset classes, they stay.
“HNW allocations are often overseen by family offices and investment committees so if they have decided to engage with private credit, it’s a sign they’ve given it serious consideration and want it to feature as part of a long-term portfolio.”
Private credit’s learning curve
However, private credit is still a relatively new asset class for many HNW investors and so misconceptions persist. Many still conflate bridging loans with subprime lending or assume high default risk. In reality, reputable lenders operate with rigorous underwriting, low LTVs, and zero capital loss track records. For example, Somo has recorded zero capital losses since its inception in 2014 to March 2025, during a period that saw £403m lent via over 2,000 loans.
“This is an asset class where knowledge and experience are king, where robust processes and due diligence are continually strengthened,” explains Somo’s Louis. “In addition, all our loans are secured against UK property at a maximum loan to value of 70 per cent.
“Transparency, speed of deployment, and tangible security make bridging loans an intelligent component of a well-spread portfolio — especially in uncertain markets.”
Private markets are being increasingly selected over their public counterparts. No returns are ever guaranteed but private credit – and within it, bridging loans – is gradually becoming established as a worthy and legitimate option for HNW portfolios.
