Enterprising Investor Mark Higgins, CFA: Private Credit, Caution, and the Lessons of Financial History
Jun 1, 2025
Mark Higgins, Senior Vice President for IFA Institutional and a financial historian, joins Lotta Moberg to delve into the world of private credit. Mark warns against blind optimism, drawing lessons from historical investment trends. He emphasizes the importance of skepticism and thorough analysis in light of looming economic cycles. The conversation also questions the influence of consultants on portfolio decisions and critiques common assumptions, making a compelling case for caution in today's saturated market.
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Late Cycle Skepticism on Private Credit
- Private credit investment is in a late cycle phase similar to historic alternative asset classes like venture capital and buyouts.
- Skepticism and caution are necessary because average returns likely will not be enough in this crowded space.
Demand Top Quartile Skill
- Only allocate to private credit if you can access top quartile investment opportunities.
- Avoid average-performing managers as the crowded market demands higher skill levels to succeed.
Consultants and Overdiversification Trap
- Consultants, originally performance reporters, now steer many institutions into over-diversified, expensive asset allocations.
- Their vast assets under advisement make it mathematically impossible for them to add aggregate value beyond indexing.