Is Private Credit Special? | Rational Reminder 305

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Private credit is one of the fastest-growing asset classes, and today we take a closer look at
why that is, and if it’s really worth the hype. When you invest in private credit, you are
essentially lending money to borrowers who might have difficulty accessing loans elsewhere.
While these assets may be profitable, they can also incur a lot of risk and typically come with
illiquidity. It is traditionally traded among institutional and accredited investors, rather than retail
investors, namely, non-professional investors. Since private credit has gained so much
popularity in recent years, we use today’s conversation to unpack how private credit works, the
role of private credit funds, the associated performance fees and risks, and what retail investors
should know about this asset class before deciding to invest. Our conversation investigates one
of the top reasons for private credit’s rise in popularity, namely risk-adjusted returns, before
evaluating whether this is a worthwhile reason to invest, depending on who you are. Stay tuned
for our after-show section where we discuss the proposed changes to the capital gains tax, why
the death of value could be exaggerated, and more!

0:00:00 Intro
0:02:49 Main Topic: Private Credit
0:38:29 Main Topic 2: Capital Gains Budget Changes Revisited
0:42:46 Aftershow

Links From Today’s Episode:

Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/t....
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Cameron Passmore — https://www.pwlcapital.com/profile/ca...
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Cameron on LinkedIn —   / cameronpassmore  
Mark McGrath on LinkedIn —   / markmcgrathcfp  
Mark McGrath on X —   / markmcgrathcfp  
Money Scope Episode 12 — https://moneyscope.ca/2024/04/19/epis...
Money Scope Episode 13 — https://moneyscope.ca/2024/04/26/epis...
David Chilton — https://thewealthybarber.com/
David Chilton on X — https://twitter.com/wealthy_barber?la...

Books From Today’s Episode:

The Wealthy Barber: Everyone's Commonsense Guide to Becoming Financially Independent —
https://www.amazon.com/Wealthy-Barber...

Papers From Today’s Episode:

‘Direct Lending Returns’ — https://rpc.cfainstitute.org/en/resea...
‘Risk Adjusting the Returns of Private Debt Funds’ — https://www.nber.org/papers/w32278
‘An Inconvenient Fact: Private Equity Returns & The Billionaire Factory’ — https://papers.ssrn.com/sol3/papers.c...
‘Reports of Value’s Death May Be Greatly Exaggerated’ — https://papers.ssrn.com/sol3/papers.c...