Jiří Król
Deputy CEO, Global Head of Government Affairs, AIMA
Successful retirement planning requires patience, consistency and a long-term mindset. Savers who build capital steadily, diversify effectively and avoid reacting to short-term market noise are typically better rewarded than trend chasers.
A growing area of interest for savers applying these principles is private credit – a segment of the corporate finance markets whereby businesses that need long-term loans obtain them from asset management firms rather than banks.
The Alternative Credit Council (ACC), the private credit affiliate of AIMA, estimates the global private credit market is greater than US$3.5 trillion.1 This scale means that what was previously regarded as an adjunct to traditional bank lending is now established as a core funding channel, giving investors direct access to financing the real economy.
Private credit is now a core part of corporate finance markets and a key source of differentiated and consistent returns to investors
Diversification is essential
For savers, the emergence of new lenders matters for resilient portfolios. Diversification has always been essential — the only free lunch in financial markets. With private credit an essential part of the lending markets, traditional diversification approaches across equities, bonds and cash can be supplemented with new sources of returns.
Institutional investors have already recognised this. ACC data shows they represent 76% of the private credit market, drawn by risk-adjusted returns, diversification benefits and regular income.1 Performance data from reinforces this appeal, with the index provider estimating rolling internal rates of return (IRRs) for private credit at 8.9% over three years, 9.6% over five years.2 The consistency of these returns over several years also highlights their resilience across market cycles.
Long-term assets
Part of what supports those benefits is the asset class’s long-term nature. Private credit loans are generally held to maturity rather than traded, so private credit funds often include redemption restrictions — meaning investors might not be able to withdraw their capital at a moment’s notice. These restrictions are an important feature that helps align investor liquidity with the underlying assets.
Private credit is now a core part of corporate finance markets and a key source of differentiated and consistent returns to investors. These features make it attractive for savers taking a patient, consistent and long-term approach to growing their capital.
