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Making Markets
Phil Huber: The Case for Private Credit - [Making Markets, REPLAY]
Feb 28, 2025
Phil Huber, Head of Portfolio Solutions at Cliffwater, brings his expertise in private credit and alternative investments to the conversation. He discusses the explosive growth of the private credit market, now at $1.2 trillion, and addresses common concerns about potential market bubbles and volatility. Huber emphasizes the importance of due diligence and manager selection while navigating this complex asset class. He also shares insights on the evolving role of alternative investments in wealth management and the strategic approaches to mitigate risks.
43:56
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Quick takeaways
- The private credit market has surged to over $1.2 trillion, driven by changing lending practices and diminished bank loan capabilities post-Dodd-Frank.
- Wealth managers are increasingly integrating private credit into portfolios due to its potential for improved risk-adjusted returns and flexible liquidity options.
Deep dives
Growth of the Private Credit Market
The private credit market has experienced significant growth, with assets under management surpassing 1.2 trillion last year. This growth has been fueled largely by shifts in lending practices, particularly after the Dodd-Frank regulations limited banks' ability to provide loans to private equity firms. As a result, private equity sponsors have increasingly turned to private credit for funding, particularly in middle-market direct lending. The stability in this market is attributed to a well-established demand from private equity, alongside a reduced number of publicly traded companies, signifying a transformation in how companies finance themselves in the modern economy.
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