We Study Billionaires - The Investor’s Podcast Network TIP588: Lucrative Opportunities in Private Credit w/ Nelson Chu
Nov 19, 2023
Nelson Chu, Founder and CEO of Percent, is a serial entrepreneur reshaping the private credit landscape. He shares insights on the decline of the traditional 60/40 portfolio and the growing appeal of private credit as an alternative investment. The discussion dives into how private credit deals are structured, current interest rates, and default rates in the market. Nelson highlights how Percent is bridging the gap in investor demand and offers tips for diversifying within this burgeoning asset class.
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60/40 Portfolio Decline
- The 60/40 portfolio is outdated due to increased market product diversity and access to private markets.
- Investors now have more options beyond traditional stocks and bonds, including esoteric ETFs and private market investments.
Credit Market Shift
- The 2008 financial crisis changed credit by making bank lending more expensive and creating a gap in the market.
- Non-bank lenders and fintechs emerged to fill the void, increasing credit accessibility.
Private Credit Characteristics
- Private credit encompasses diverse areas like small business loans, consumer lending, and litigation finance.
- It offers higher premiums than traditional investments and has grown significantly since the 2008 crisis.