What’s Driving the Shift in Portfolio Construction: Private Credit, Private Equity, and the New Market Reality

As investor appetite for income and private credit exposure grows, BDCs remain a powerful tool—but higher-for-longer rates, credit concerns, and shifting portfolio dynamics are making manager selection more critical than ever.

Resilient fundamentals and robust technicals drove credit performance in the first half of 2025. Despite tariff headlines, geopolitical tensions, and policy volatility, credit held firm. Solid fundamentals, strong demand, and limited new supply helped anchor spreads. We expect these supportive dynamics to persist through year-end.

US tariffs have climbed to their highest level in nearly 90 years, fueling market volatility and creating uncertainty for corporations. The result? We see slower growth, higher inflation, and rates staying higher for longer. While we don’t foresee a recession, we expect headwinds on both supply and demand fronts.