Behind the Yield

Private Credit: The Train Has Left the Station

By Charles Urquhart, CFA · October 1, 2025

Why This Matters

Private credit used to be a backroom trade for endowments and pensions. Now it shows up in client meetings, CNBC segments, and even retirement plan decks.

The numbers that grab attention are simple: 8–11% yields. The marketing copy highlights “low volatility.”

That puts advisors in the middle — translating the buzz into something clients can actually understand.

My take? I’m all for the free flow of capital. Private credit is here. It’s not going away. Our job is to strip away the pitch and make it plain.

How I Explain It to Clients

Private credit is just lending money to companies too small to issue bonds on Wall Street.

Instead of buying Coca-Cola debt, you’re lending to:

• A regional hospital

• A mid-market manufacturer

The trade-off: you get higher yields, but you can’t sell quickly if you need out.

Client version: “It’s not a savings account, but it’s steady income.”

From Niche to Mainstream

The deals tell the story:

• Goldman + T. Rowe Price: Goldman just invested $1B to build retail portfolios mixing public and private credit.

• Bain + Lincoln Financial: Partnered on a retail fund, with Bain taking nearly a 10% stake in Lincoln.

These aren’t boutique shops tinkering. This is Wall Street betting that private credit becomes part of everyday portfolios.

What’s Really Behind the 8–11%

There’s no magic. It’s mostly interest payments plus a premium for things investors don’t love:

• Illiquidity — you can’t trade in and out.

• Smaller, less-known borrowers.

• Complex structures that need babysitting.

Those “smooth” return lines? That’s just model-based pricing. Risk doesn’t vanish — it just shows up later.

The Retail Wrappers You’ll See

Private credit is creeping into client accounts through interval funds, non-traded BDCs, and tender-offer funds. They come with baggage:

• Withdrawals capped (usually quarterly)

• NAVs based on models, not market prices

• Layered fees that add up

• Leverage baked in to juice yields — and risks

Pro tip: read the redemption rules and the fee table before the glossy deck.

Hazards That Don’t Go Away

• Liquidity: Gates will slam shut when stress hits.

• Hidden bumps: Smooth returns don’t show cracks until later.

• Underwriting: Standards always sag when too much money floods in.

• Rates: Floating coupons helped when the Fed hiked — they’ll hurt just as quickly when cuts arrive.

Where It Belongs (and Doesn’t)

Good fit for:

• Long-term investors who don’t need quick cash

• Portfolios looking for income with less daily mark-to-market noise

• Taxable accounts that can handle steady payouts

Not good for:

• Emergency funds

• Nervous, statement-checking clients

• Portfolios already stuffed with illiquids

What to Tell Clients

Clients hear: “11% yield, low volatility.”

You add:

• “It pays more because you can’t sell it any time you want.”

• “It looks smooth because it’s appraised, not because it’s risk-free.”

• “If rates fall, payouts fall too.”

• “This is long-term income — not your rainy-day fund.”

My Opinion

I’m not planting a flag on whether private credit is good or bad.

I am saying: it’s here. Advisors can’t veto it. But we can size it, frame it, and make sure clients don’t mistake “smooth” for “safe.”

The edge isn’t chasing the flashiest yield. The edge is being the calm voice that calls things what they are.

Last Word

Private credit is the train that left the station.

You don’t have to chase it. You can’t ignore it.

Recognize what it is. Explain what it isn’t. Size it appropriately.

That’s not hype. That’s clarity.

📬 Charles Urquhart, CFA Founder, Fixed Income Resources curquhart@fixedincomeresources.com