Practical Applications of Performance of Private Credit Funds: A First Look

Practical Applications Summary

In Performance of Private Credit Funds: A First Look, from the Fall 2018 issue of The Journal of Alternative Investments, Shawn Munday of the University of North Carolina, Wendy Hu of Burgiss, Tobias True of Adams Street Partners, and Jian Zhang of Adams Street Partners analyze the performance of private credit funds and conclude that they deliver superior performance relative to the S&P/LSTA US Leveraged Loan 100 index. They further conclude that direct lending funds, which compose a subset of private credit funds, offer the attractive combination of low beta and high alpha relative to both the S&P/LSTA US Leveraged Loan 100 index and the ICE Bank of America Merrill Lynch Global High Yield Index. Additionally, direct lending funds offer notable diversification benefits because of their generally low correlation with all relevant benchmark indexes.

TOPICS: Real assets/alternative investments/private equity, fixed income and structured finance, performance measurement