Private Credit on Defensive Again Over ‘Mark-to-Myth’ Study (1)

The private credit industry’s claims of market-beating, stress-free returns are “illusory,” a group of academics say, adding fuel to the fire in a week that already saw executives fend off broadsides from the likes of Jamie Dimon.

Academics from Johns Hopkins University and University of California, Irvine, argue that direct lenders offer investors marginal returns compared with more transparent and widely-traded leveraged loans — and less in some cases. In research published in the Journal of Private Markets Investing, they contend that the asset class produces limited alpha, or extra compensation over market benchmarks.

“Private credit performance is ...