NEPC’s Oliver Fadly was quoted in a recent Wall Street Journal article to provide insight on how the industry and investors are thinking about the asset class. View the article on The Wall Street Journal’s site here.
North American pension-fund investment in private-market loans reached an eight-year high in 2022, even as banks pulled back on lending and default rates inched upward.
The average share of these retirement funds parked in the illiquid, typically unrated debt has crept up steadily to 3.8%, the highest on record, according to analytics company Preqin. Though a fraction of the overall portfolio, private credit now amounts to more than $100billion in the retirement savings of U.S. and Canadian teachers, police and other public workers, according to a Wall Street Journal estimate based on Federal Reserve data and pension financial reports. And the pensions are planning to add more: Their average target allocation is 5.9%.
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Investment consultant NEPC said in a presentation to the Ohio workers fund last year that many private-credit NEPC managers have had trouble liquidating funds by the promised maturity date.
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But the small scope of private credit in the late 2000s means it is hard to draw conclusions about how the asset class would perform in another crash.
“It’s a little bit more of a nascent asset class and so we try to stress caution there,” said Oliver Fadly, head of private debt at NEPC. “It’s not fully tested.”
Click here to continue reading the full Wall Street Journal article.