This is how awful private credit was in Q1…
It outperformed all major public credit indices.
Despite all the media hysteria around private credit earlier this year, the reality is that private credit interval funds broadly outperformed:
- high yield bonds
- leveraged loans
- investment grade bonds
- and even Treasuries in Q1 2026
Asset-backed lending was the standout.
That’s exactly why, from day one, I made traditional direct lending the smallest sleeve of our private credit allocations.
Direct lending is still a massive and important asset class with a risk premium I expect to be realized over long periods of time.
But in the context of a broader portfolio, I care deeply about diversification of return streams.
Direct lending is much more tied to traditional corporate risk than more niche lending strategies like:
- Litigation finance
- Music royalties
- Factoring government receivables
Sure enough, when stress showed up in software‑heavy direct lending this year, asset‑backed finance behaved very differently.
That doesn’t mean asset‑backed finance is “safe.”
There is absolutely risk there too.
But the risks are often different and less correlated to what’s happening in direct lending.
At the overall portfolio level, that’s why we invest across:
- Stocks
- Bonds
- Real estate
- Hedge funds
- Infrastructure
- Private equity
- And multiple types of credit