Family Office Investors See Promise in Credit, Bridge Financing to Manage Risk

Key Takeaways:

  1. As interest rates rise, investors have pivoted to the private credit market for their investment portfolio.
  2. Private credit is a more attractive option for investing long term when economic conditions make capital markets tough to predict long term.

As interest rates continue to rise and small family offices feel unease over large, long-term investment plans, private credit funds have positioned themselves as attractive options with shorter investment duration periods, lower risk profiles, and oftentimes higher returns. A recent Wall Street Journal article highlights how private credit funds support American businesses of all sizes and supplies data points that explain its recent boost in popularity. Key excerpts can be found below.

“As interest rates have risen, some family offices have tilted toward private-market investment strategies with shorter durations and lower risk profiles, such as private credit and real-estate bridge financing, according to some investors who manage family wealth.”

“A recent survey of 166 family office investors published by Goldman Sachs earlier this year found that 94% of respondents plan to either maintain or increase their strategic allocations to private credit over the next 12 months.”