With the S&P 500 on pace for its worst monthly performance since December of last year, investors are increasingly turning to alternative assets outside of equities and bonds to generate returns.
One of those strategies is private credit. Despite the changing macro backdrop, the industry has posted annual gains for the last 13 years and is expected to continue drawing strong interest from institutional investors. According to a new report by Pitchbook, investors are likely to put more than $200 billion in commitments into private credit this year, for the fourth year in a row.
As the strategy gains steam, some are concerned that higher-for-longer interest rates could put more stress on the balance sheets of borrowers. Though, Michael Arougheti, who helms one of the largest private credit firms in the world, said he's not too concerned about a major default cycle.