Private credit has long been an attractive investment. Historically stable performance and broader knowledge of the asset class have driven an increasing amount of capital into the space.

This paper from Nuveen assesses the opportunities for private credit in today’s investment environment and considers a number of factors in determining how to incorporate these investments into an existing asset allocation strategy.

Key Highlights:

• Private credit may help institutional investors address timely challenges, including generating yield and providing low-volatility, low-correlated returns. But making allocation decisions can be challenging.
• We favor allocations to higher-quality US senior- and junior-level debt, particularly from healthcare, business-to-business services, and software companies.
• Mezzanine debt may offer opportunities for value and high-yield premiums at what may be a market bottom, so we suggest reserving resources for these opportunities.
• Private investing offers a number of levers to help create value, but investment scale, experience, and access to relationships are essential.

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