The Private Credit Edge: What Your Advisor Isn’t Telling You
Think your “safe” bonds have you covered? Think again. For years, accredited investors have clung to a 60/40 portfolio (60% stocks, 40% bonds) as the gold-standard of diversification. Stocks for growth, bonds for stability – that’s the conventional wisdom. But what if the stable side of your portfolio is quietly underperforming (or even underprotecting) you?
Recent market history has thrown this into stark relief: in 2022, the supposedly safe U.S. bond market cratered with a -13% loss, its worst annual performance in modern history . Even a classic 60/40 portfolio lost about 16% that year , as both stocks and bonds sank in tandem. Meanwhile, a once “niche” asset class – private credit – not only held steady but delivered strong positive returns through the turmoil . If you’re an accredited investor looking for consistent yield and true diversification, it’s time to take a hard look at private credit.
Private Credit vs. Public Markets: Outsized Performance, Lower Volatility
Let’s start with performance – after all, results talk. Private credit (also known as private debt or direct lending) has quietly been a star performer over the past decade. How good? Try roughly 9% annualized returns for senior private loans over the last 10 years . That’s about double what investors earned in comparable public corporate loans or high-yield bonds over the same period . In fact, private credit even outpaced global equities (which returned ~8.1% annually) in that timeframe . And it’s not just long-term outperformance – even in recent years marked by wild markets and rising rates, private credit has delivered. For the 12 months through Q3 2023, U.S. direct lending funds (a major category of private credit) returned over 11% , while many public bond indices were flat or negative.
Long-term returns for private credit have been compelling. As one example, the Cliffwater Direct Lending Index (representing middle-market private loans) delivered ~8.6%–8.9% IRR over 5- and 10-year periods, vastly outperforming a comparable public loans index (~4.4% IRR) . Even more opportunistic private credit segments (mezzanine/subordinated and distressed debt) achieved double-digit returns, handily beating public market equivalents. In short, private credit has offered equity-like returns with credit-like volatility over the past decade.
Crucially, this performance has often come with lower volatility and steady income. Private credit investments are typically floating-rate loans or high-yielding credit facilities that aren’t marked-to-market daily like bonds or stocks. You don’t see wild price swings on a screen every day – and that can be a good thing. When interest rates surged in 2022, publicly traded bonds lost double-digits of their value , but private credit portfolios largely kept chugging along, adjusting to higher yields without forced selling. By design, private loans are meant to be held to maturity, and investors primarily care about the income stream (often 8–12% annually) and ultimate repayment, rather than short-term price fluctuations.
It’s worth noting that private credit’s strong returns aren’t just a fluke of the economic cycle – they’re underpinned by structural advantages. Private lenders often deal with senior secured loans (meaning they have collateral backing and priority in repayment) and can perform rigorous due diligence and impose tighter covenants on borrowers than public markets do. The result? Lower default rates than comparable public high-yield debt . In other words, private credit investors have historically seen fewer loans go bad – one study found private loans had lower default rates than broadly syndicated loans, thanks to better lender protections and active management by sponsors . (Even when defaults do happen, private lenders often negotiate recoveries or restructuring behind the scenes – it’s a hands-on approach to risk management that passive bond index funds simply can’t do.)
From Niche to Mainstream: Institutions Are Piling In
If private credit is so compelling, who’s investing in it? In short: institutional investors and savvy wealth managers. What began after 2008 as a niche corner of alternative investments has exploded into a $1.6 trillion market by 2023 . To put that growth in context, that’s a 4x increase in about a decade . (In 2008, only around $375 billion was invested in private debt; today it’s well over $1.5 trillion .) This surge has been driven by big structural shifts: banks pulled back from lending after the Global Financial Crisis, opening the door for private funds to step in . Companies still needed loans, and private credit funds answered the call, with capital from pensions, endowments, insurance companies, and family offices.
Global private debt (credit) assets under management have skyrocketed since 2008. In 2008, the total market was under $500 billion; by 2022 it reached roughly $1.6 trillion in AUM, with the U.S. share (dark blue) growing especially fast . This exponential growth reflects institutional acceptance of private credit as a core holding. Large pension funds, endowments, and ultra-high-net-worth investors have steadily increased allocations, seeking the extra yield and diversification private credit provides.
Consider this: 70%+ of the capital in private credit today comes from pension plans, endowments, foundations, and family offices . These sophisticated players have teams of analysts and consultants – they’ve clearly seen the writing on the wall. In fact, a recent Nuveen survey reported that the percentage of large institutions investing in private credit has more than doubled in the past five years . And 66% of institutions plan to boost their allocations to private markets (including private credit) in the next few years . Simply put, private credit has gone mainstream among the smart money.
Yet, oddly, many individual accredited investors (perhaps including you) have little or no exposure to this asset class. It’s not because you can’t – as an accredited investor, you do qualify to invest in many private credit opportunities. Rather, it often comes down to access and awareness. Traditional channels focus on stocks and bonds, and many financial advisors haven’t caught up to what the big institutions are doing. Let’s explore why that is.
Why Your Financial Advisor Isn’t Recommending Private Credit
You might be thinking, “If private credit is so great, why didn’t my advisor tell me about it?” It’s a fair question, and it boils down to incentives and constraints in the advice industry – not necessarily the quality of the investment. Most financial advisors aren’t steering clients to private credit for a few key reasons:
• Compliance & Regulatory Hurdles: Recommending private placements or alternative investments often triggers extra compliance scrutiny. Big brokerage firms and wirehouses have strict due diligence processes and may prohibit advisors from offering any product not on the firm’s approved menu. For many advisors, it’s simply easier (and “safer” compliance-wise) to stick with plain-vanilla mutual funds and bonds than to navigate the paperwork and approvals required for private credit offerings. Regulators like the SEC and FINRA impose suitability rules – if an advisor steps outside the typical 60/40 box, they better have their documentation in order. This red tape can be a strong deterrent.
• Limited Product Menu: Even if an advisor believes in private credit, they might not have any approved funds to offer you. Many large firms only allow a curated list of investments on their platform. Niche private credit funds (especially newer or smaller ones) often aren’t on that list. Unless the firm has an interval fund or publicly registered vehicle that does private credit, the advisor effectively has nothing to sell you in this space. It’s the classic case of “if all you have is a hammer, everything looks like a nail.” Advisors recommend what they can readily use – and for most, that’s stocks, ETFs, and maybe the occasional REIT or hedge fund, but not private credit.
• Suitability & Client Fit: Private credit investments are typically illiquid and require investors to be locked-in for a term (e.g. 1-5+ years). Advisors are trained (and obligated) to recommend only “suitable” investments given a client’s goals, net worth, and liquidity needs. Even if you are an accredited investor, an advisor might shy away if they think you’ll need quick access to your cash or if your experience with alts is limited. They may default to assuming you won’t tolerate the illiquidity or complexity. It’s partly patronizing, partly caution – advisors sometimes underestimate their clients’ appetite for sophisticated assets, erring on the side of conservatism.
• Risk Aversion & Knowledge Gap: Let’s face it – many advisors are most comfortable with what they know: stocks, bonds, and mutual funds. Alternatives like private credit can be seen as “overly complicated, unfamiliar, illiquid, and opaque,” as a recent industry poll of advisors put it . They often carry higher fees and less transparency, which scares off advisors who don’t feel fully educated on them . There’s also a bit of career risk at play: no advisor wants to be the outlier who recommended a fund that later struggles or, in a worst-case scenario, restricts redemptions. It can seem safer to stick with the herd – even if that means clients miss out on potential returns.
As one wealth manager candidly admitted, “There are plenty of simpler, more liquid options out there. Why take the chance on an alternative that only might outperform and could cause drama for the client?” .
This mindset leads many advisors to default to the status quo.
The bottom line is that misaligned incentives and institutional inertia often keep private credit off your advisor’s radar – not a lack of merit. So don’t assume “my advisor never mentioned it, so it must not be good.” Advisors also never mentioned index funds back in the day, until clients started demanding them. It took years for the advisory world to embrace ETFs and now most do. We’re seeing a similar inflection point with alternatives now – a recent survey showed 92% of advisors are at least dabbling in alternatives for client portfolios – but many still prefer registered funds over private funds .
Change is coming, but slowly. In the meantime, informed accredited investors willing to do their homework (and possibly look beyond a single advisor’s offerings) can capitalize on opportunities in private credit that others are missing.
Liquidity and “Safe” Bonds: Myths vs. Reality
Two big objections often come up when discussing private credit: liquidity (or lack thereof) and the perceived “safety” of traditional bonds. Let’s tackle these head on, because they’re riddled with myths.
The Liquidity Trap
It’s true – private credit is generally illiquid, meaning you can’t sell at the snap of a finger like a stock. Many private credit funds require you to commit capital for a set term, such as a few years, and you might have limited or no redemption options until that term is up. At first blush, that sounds scary. But ask yourself: Do you really need all your investments to be instantly liquid? If this is long-term money (think retirement or wealth-building capital), liquidity might be an overrated virtue. In fact, liquidity comes at a cost. Public markets make it too easy to panic-sell at the worst moments or to chase fads.
By contrast, private investments enforce discipline – you’re in it for the long run, which often leads to better outcomes. Moreover, investors demand extra return for illiquidity, which is known as the illiquidity premium. Numerous studies find that because so many people irrationally crave liquidity, those willing to forgo it are rewarded with higher yields . In other words, illiquidity is a feature, not a bug, for patient investors. It’s like earning an “income bonus” for agreeing not to trade.
Of course, you shouldn’t lock up money you might truly need in an emergency – but for strategic long-term allocations, a bit of illiquidity can actually strengthen a portfolio. David Swensen, the legendary Yale endowment chief, built Yale’s portfolio on the idea that embracing illiquid assets leads to superior returns over time . The key is to balance your own liquidity needs: keep enough liquid cash or public assets for short-term contingencies, and don’t be afraid to park a portion of your wealth in illiquid but higher-yielding private credits to work overtime for you.
The Myth of Bond “Safety”
Bonds are often marketed as the “safe, conservative” part of a portfolio. And in some ways, they are – high-quality bonds usually don’t default, and they provide income. But safety is relative. In 2022, investors learned the hard way that even investment-grade bonds can bite. U.S. Treasuries – arguably the safest assets on the planet – fell over 15% for long-term maturities when inflation spiked and interest rates shot up. The aggregate bond index lost 13%, something that wasn’t supposed to happen in a standard risk model . Meanwhile, inflation eroded the purchasing power of bond interest payments. So if you were sitting in “safe” bonds, you still lost significant real wealth. Volatility and risk aren’t exclusive to stocks. They just creep up in different ways for bonds (interest rate risk, inflation risk, credit downgrades, etc.).
Private credit, on the other hand, typically yields far higher income than public investment-grade bonds – often two to three times more – which provides a cushion against these risks. Yields of 8-13% give you a lot more breathing room than a 2-3% bond yield if inflation runs hot or rates rise. And many private credit loans are floating rate, meaning their interest payouts increase when benchmark rates rise, which can actually benefit investors in a rising rate environment (the past two years have been a prime example, as private credit funds’ incomes jumped while fixed-rate bond prices tumbled).
What about default risk? Certainly, lending to mid-sized private companies or specialized loans carries risk – not every borrower will pay back in full. But experienced private credit managers mitigate this through diversification and structuring. They might hold dozens or hundreds of loans across industries, senior-secured claims, collateral backing, and covenants that trigger early warnings or remedies if a borrower’s finances deteriorate. This active management contrasts with buying a corporate bond and hoping for the best.
Historically, the loss rates (after recoveries) on private middle-market loans have been quite competitive with public high-yield bonds, especially on a risk-adjusted basis when you factor in the higher income.
Finally, consider this thought experiment: If you truly don’t need to touch a chunk of your money for, say, the next 3-5 years, which is “safer” – a portfolio of floating-rate private loans to dozens of companies yielding ~10%, or a portfolio of publicly traded bonds yielding ~4%? The private loans will fluctuate in quoted value far less (since they aren’t traded daily), they pay you more than twice the income (building a bigger buffer), and you’re not exposed to the whims of market sentiment every day.
The trade-off is you can’t sell immediately – but if you weren’t going to sell anyway, that’s irrelevant. The real risk to most investors is not short-term volatility; it’s not earning enough return to meet their goals. In that sense, an asset yielding in the high-single or low-double digits, with reasonable credit underwriting, can actually be safer for your financial plan than one yielding peanuts, even if the latter feels comfortable. It’s time to rethink what “safe” truly means.
Meet the Flex Fund: A New Level of Flexibility in Private Credit
By now, you might be wondering how to get involved in private credit as an individual investor – and how to address those concerns about access, illiquidity, and complexity. This is where Ballard Global’s Flex Fund comes into play. In the spirit of challenging the status quo, Ballard Global created the Flex Fund specifically to give accredited investors a flexible, investor-friendly way to tap into private credit. It’s essentially a private credit fund designed with the investor’s convenience in mind, addressing many of the hurdles we discussed.
What makes the Flex Fund different? In a word, flexibility. Investors can tailor key aspects of their investment to suit their needs:
Diversified Private Credit Exposure
The fund doesn’t bet on just one borrower or sector. It spans multiple lending areas – from consumer loans to real estate debt, agribusiness financing, even AI-driven lending – to create a broad, balanced portfolio of private credit opportunities . This diversification helps spread risk and reduce reliance on any single source of repayment. Essentially, you get a basket of private loans working for you, much like a mutual fund provides a basket of stocks.
Fixed High Returns
Unlike most funds that have uncertain returns, the Flex Fund offers fixed returns ranging from 9.5% up to 13% APY (annual yield), depending on the term length and payout options you choose . Those figures are eye-popping compared to public markets – essentially you’re locking in a high-single/low-double-digit yield.
It’s like choosing a CD, except with a much higher interest rate. You know upfront what income to expect – say, for example, a 10% fixed annual return – providing a level of certainty to plan around. (Of course, all investments carry risk and those returns aren’t guaranteed – but the fund is structuring its portfolio to offer those fixed payout rates to investors.)
Flexible Income Distributions
The “Flex” in Flex Fund also applies to how you take your returns. Investors can customize their income preferences – monthly, quarterly, annual payouts, or even tax-deferred reinvestment for compounding . So whether you’re seeking regular passive income to live on, or you’d rather let it ride and grow, you have control. Many private investments lock you into a set distribution schedule; Flex Fund lets you align the cash flow with your goals.
Custom Term Options (1 to 7 Years)
One of the most innovative features is the ability to select your term length. You’re not forced into a one-size-fits-all lockup. You could commit for as short as 12 months or as long as 7 years, with several options in between. Shorter terms tend to correspond to the lower end of the yield range (around 9-10%), while longer terms pay up to ~13% .
This is a game-changer – it means if you’re hesitant about illiquidity, you can dip your toe with a shorter commitment. Or if you’re comfortable locking in a great yield for longer, you can do that too. Essentially, you calibrate your own liquidity vs. return trade-off. Very few private credit offerings give individuals this level of choice.
In sum, the Ballard Global Flex Fund is bringing an institutional-grade strategy to individual investors, but with a level of flexibility and customization that even many institutions would envy. It’s bridging the gap between what big sophisticated players have done in private markets for years and what an accredited individual investor can conveniently do. By providing diversification, fixed yields, payout flexibility, and term options, the Flex Fund addresses the key concerns (risk, income needs, liquidity) that might otherwise hold someone back from private credit.
To be clear, private credit isn’t without risk – no investment is. The Flex Fund’s attractive returns reflect the reality that these are loans to various borrowers that carry credit risk. There’s no FDIC insurance or government backstop; success rests on the quality of the underlying loans and the manager’s skill. That said, Ballard Global’s approach of spreading across sectors and structuring for fixed returns shows a thoughtful risk management ethos.
And remember, these investments are limited to accredited investors – they’re intended for those who have the financial savvy and cushion to handle the risks. (Standard disclaimer: past performance is not indicative of future results, and you should review all offering materials and risk disclosures before investing.)
Rethinking Your Portfolio
In today’s market, sticking strictly to the old playbook of stocks and bonds could mean settling for mediocrity. The data is clear: private credit has delivered equity-like returns with bond-like steadiness, and it’s attracting billions from the world’s most sophisticated investors. Yet, most individual portfolios have zero allocation to this asset class.
The disconnect largely comes down to awareness and access – but those barriers are falling. We’ve debunked the myths that have kept private credit in the shadows: yes, it’s less liquid, but that illiquidity is amply rewarded; yes, bonds are familiar, but they’ve shown they can be fragile when the world changes.
The challenge to you as an accredited investor is this: dare to question conventional wisdom. If your portfolio is heavily weighted to public stocks and bonds, ask yourself if you’re truly diversified and positioned for the road ahead. Are you comfortable missing out on an asset class that delivered ~9% annualized over a decade and kept making money even when bonds and stocks sank?
If not, it’s time to reconsider your portfolio construction.
Fortunately, exploring private credit no longer means jumping blind into some opaque limited partnership. Solutions like Ballard Global’s Flex Fund are making it straightforward and tailored to your needs. You can get the yield and stability benefits of private credit on terms that you control – a level of empowerment investors simply didn’t have in the past.
In the end, the goal isn’t to put all your eggs in the private credit basket – it’s about broadening your toolkit. Maybe that means carving out, say, 10-20% of your portfolio for private credit in order to boost income and reduce correlation with public markets. The right number will depend on your situation, but the first step is to get informed and break the inertia. Don’t let outdated assumptions or a lack of advisor initiative hold you back. The investing landscape evolves, and so should your approach.
Accredited investors have an opportunity to invest more like the big leagues – to earn 9-13% yields while others settle for 4-5%, to be lenders instead of just equity holders, and to capitalize on the private credit boom that’s reshaping finance. Ballard Global’s Flex Fund is one invitation to do just that. Whether you pursue this specific fund or another avenue, the important thing is to act on knowledge: now that you know what’s possible, how will you respond?
If you’re ready to break free from the 60/40 rut and explore how private credit could enhance your portfolio, let’s continue the conversation. Ballard Global’s team can share how the Flex Fund works in detail and help determine if it fits your objectives. The world of private credit is no longer just for pensions and endowments – it’s open for you. Don’t let “the best kept secret” stay a secret in your strategy. It’s time to take a bold, informed step toward potentially better returns and true diversification.
Disclosure: Private credit investments involve risk, including potential loss of principal. They are intended for accredited investors who can bear such risks. The information above is for educational purposes and not a solicitation or financial advice. Consult with your advisors and conduct due diligence before making any investment decisions.
Sources:
1. Cambridge Associates – Private Credit Markets Are Growing in Size and Opportunity (2024)
2. Mariner Wealth Advisors – Private Credit Markets – A Growing Force (May 6, 2024)
3. Nuveen EQuilibrium Survey via CIO Magazine – Institutions doubling down on private markets (2025)
4. Financial Planning – Why many advisors avoid alternative assets (Oct 28, 2024)
5. Ben Carlson – 2022 Was One of the Worst Years Ever For Markets (Jan 2, 2023)
6. Kitces.com – Capturing the Illiquidity Premium (Dec 9, 2015)
7. Ballard Global (LinkedIn post) – Introducing the Ballard Global Flex Fund (2025)