Fund selectors: Private credit “complement, not replacement”

How convincing are claims that private credit can substitute for traditional fixed income in institutional portfolios, and what blind spots do you see in their risk modelling? Mark McKeown, managing principal / head of fixed income research, Meketa Investment Group: Including private credit in public-market bond portfolios can reduce daily credit-market volatility and provide diversification, but it also introduces liquidity constraints that vary by institutional client. Longer-term investors such as insurance companies are better positioned to use private credit, while institutions with shorter horizons typically require higher liquidity. As a result, private and public bond portfolios are generally kept separate,…