With interest rate volatility, uneven growth and geopolitical tensions, fixed income strategies are being re-evaluated. Among investors, family offices, (high net worth) HNW individuals and even institutions looking to control risks and manage cash flows—private credit has emerged as a quietly growing asset class that offers both yield and resilience in today’s changing investment landscape.
What Is Private Credit—and Why the Growing Interest?
In short, private credit refers to non-bank lending to businesses, typically outside the public debt markets. Private credit enables borrowers to access customized capital that they may not be able to secure from traditional lenders like banks.
The appeal for investors lies in the combination of higher yields, steady income, shorter loan durations, and structured downside protections all with relatively low correlation to the public markets. With traditional bank lending pulling back—particularly to small- and medium-sized enterprises (SMEs)—a funding gap has formed. Private credit funds have increasingly stepped in to meet this need.
Not All Private Credit Funds Are the Same
While most private credit strategies follow a direct lending model, where the fund itself originates and holds loans, some take a different approach.
One such method is the warehouse financing structure, where investor capital is deployed into bankruptcy-remote vehicles that purchase and hold loan assets originated by third-party lending platforms. This model allows for:
- Greater loan diversification
- Additional credit oversight at the platform level
- Stronger structural protections for investor capital
Funds that are structured this way typically work with vetted, specialist loan originators and maintain robust due diligence and credit governance protocols.
Private Credit vs. Traditional Fixed Income Products
| Instrument |
Yield |
Liquidity |
Risk Profile |
Sensitivity to Rates |
| Government Bonds / T-bills |
Low |
High |
Very Low
(sovereign) |
High (duration risk) |
| Corporate Bonds |
Moderate |
High |
Varies
(credit risk) |
Moderate |
| Bond Funds / ETFs |
Low–moderate |
High |
Diversified
but volatile |
High |
| Private Credit Funds |
High |
Varies
(often low) |
Moderate
(loan risk) |
Low–moderate
(if floating) |
| Warehouse-structured Private Credit Funds |
High |
Varies |
Diversified & secured |
Lower
(short-dated loans) |
Liquidity has mainly been the main concern for many investors in private credit, especially if there is a requirement for a lock-up period of 1 to 2 years.
Should liquidity be a major concern, identifying a private credit fund that provides accessibility and good risk adjusted income with liquidity and monthly distributions, a combination rare in alternative assets will certainly offer investors an edge.
What Investors Should Consider
Despite its potential, private credit, like all fixed income, comes with trade-offs:
- Illiquidity, though increasingly mitigated by structured funds offering regular redemption cycles
- Underlying loan quality and platform oversight, which differ across funds
- Transparency, especially around fees, credit selection, and loan performance
Due diligence on the fund manager’s experience, track record, and lending approach is essential.
A Permanent Role in Income Portfolios?
Private credit is no longer just a tactical yield asset class: it is increasingly viewed as a strategic allocation in modern portfolios. With regulatory landscape and investor appetite for smarter, income-generating alternatives, the asset class is seeing continued growth.
As structures evolve from traditional direct lending to innovative warehouse models, investors now have more ways to access the potential of private credit, without compromising liquidity, governance, or risk management.
Regulatory and Market Readiness in Singapore
Singapore’s financial ecosystem seems to support this evolution. The Monetary Authority of Singapore (MAS) has earlier in the year issued a consultation paper proposing a long-term investment fund framework for the private market, a move that signals a broadening of access to such illiquid investments beyond wealthy individuals. The central bank said in a statement in March, “Recently, MAS has observed growing interest from retail investors in such investments, and interest from experienced industry players to offer private market investment fund products to retail investors.”
In essence, private credit may no longer be exclusive or niche. With more investors seeking uncorrelated sources of return to help mitigate risk in a traditional 60/40 portfolio, these investments will likely become ever-present constituents of a well-balanced portfolio.
