Opportunities in Private Credit for Institutional Investors

Executive summary:

  • Private credit is being sought—with the goals of income and capital preservation—to achieve real capital growth and drive portfolio returns among retail and institutional clients alike.
  • Many large institutional investors have found themselves overexposed to illiquidity. Some are selling in the secondary markets, and some are holding tight with the hope that liquidity will come back soon.
  • Demand for private credit seems very strong across the board.

On Sept. 26, Samantha Foster, managing director and senior portfolio manager for private markets at Russell Investments, moderated a discussion on the private credit markets with panelists Keith Brakebill, director and senior portfolio manager of private credit at Russell Investments, and Brad Colman, global head of healthcare investing at Blackstone Credit.

Following is a recap of some key highlights from their conversation.

Foster began by saying that retail and institutional clients alike have sought private credit to achieve real capital growth and drive portfolio returns. She prompted Colman for an opening comment on his firm’s focus.

“When you think about growing life expectancy or quality of life and the drug development that is kind of underpinning that, those are areas that we think are really investable,” Colman said about healthcare IT and life sciences.

Turning to Brakebill, Foster asked his thoughts on private credit strategies and high-conviction sectors.

“We like to have hard assets and contractual revenues and defensiveness on the downside just as a general rule in private credit,” said Brakebill, who highlighted three areas where he said capital is both needed and is scarcest in the marketplace.