Market
Memos from Howard Marks: On Bubble Watch
Accessing portfolio income potential
The Power of Private Credit
The Federal Reserve, along with many central banks globally, has concluded its aggressive interest rate hiking cycle aimed at curbing inflation. Though anticipated, the pace and velocity of further rate cuts is unknown and base rates remain historically elevated. While there are many unknowns, the expected path forward may end up more stable than the market is currently pricing in today.
With this uncertainty, private credit currently offers an attractive entry point for yields compared to traditional fixed income. Even if rates decline, the search for enhanced income continues—and private credit remains an attractive portfolio solution, in our view.
Image
Investment success doesn’t come from buying good things, but rather from buying things well.
Howard Marks
Co-Chairman, Co-Founder, Oaktree
Private Credit: Potential Benefits
Private credit’s unique characteristics can make for an alternative investment that’s not only stable, but also brings several potential benefits to your portfolio.
Potential for attractive returns
Private credit has outperformed traditional fixed income over the long term.
Annualized Total Returns
Image
Past performance is not indicative of future results. Information does not represent returns of a fund. An investor cannot invest in an index. For illustrative purposes only. Investment Grade Bonds represented by Bloomberg U.S. Corporate Bond Index, Senior Loans represented by Credit Suisse Leveraged Loans Index, Treasuries represented by FTSE 10-Year Treasury (OTR), High-Yield Bonds represented by ICE BofA U.S. HighYield Index, Private Credit represented by Cliffwater Direct Lending Index. Source: Bloomberg, Cliffwater. January 1, 2010 through December 31, 2023.
Risk Mitigation Potential
Private credit’s effective downside risk management resulted in low losses for last 20 years.
Average Annual Loss Rate
Image
Past performance is not indicative of future results. Calculations of losses include both interest income and principal gains and losses. Private Credit represented by Cliffwater Direct Lending Index (begins in 2004). Leveraged Loans represented by Credit Suisse Leveraged Loans Index from 2002 through 2014 and JPMorgan thereafter due to data availability. High-Yield Bonds represented by NYU Salomon Center/KBRA Altman from 2002 through 2022 and JPMorgan thereafter due to data availability. Source: JPMorgan Markets, Morningstar, Cliffwater. As of December 31, 2023.
Enhanced Diversification
Private credit exhibits relatively low correlations with other asset classes, seeking to enhance diversification.
Correlations
Image
Past performance is not indicative of future results. Private Credit reflects Cliffwater Direct Lending Index, High Yield Bonds reflects ICE BofA Global High Yield Index, Senior Loans reflects Credit Suisse Leveraged Loan Index, Corporate Structured Credit reflects JPMorgan CLO 2.0 BB Post-Crisis Index, Emerging Markets Debt reflects JPMorgan Corporate Broad CEMBI Diversified High Yield Index. U.S. Equities represented by S&P 500. See disclosures for full index definitions. Indexes are unmanaged and cannot be purchased directly by investors. Index performance shown for illustrative purposes only and does not predict or depict the performance of any investment. Source: JPMorgan, ICE BofA, Credit Suisse, Bloomberg, Morningstar, Cliffwater. For the period January 1, 2013 through December 31, 2023.
Understanding Private Credit
Learn more about the fundamentals of private credit.
Important Disclosures
©2025 Brookfield Oaktree Wealth Solutions LLC is a wholly owned subsidiary of Brookfield. Brookfield Oaktree Wealth Solutions LLC is registered as a broker-dealer with the U.S. Securities & Exchange Commission (SEC) and is a member of FINRA and the Securities Investor Protection Corporation (SIPC).
The information contained herein is for educational and informational purposes only and does not constitute, and should not be construed as, an offer to sell, or a solicitation of an offer to buy, any securities or related financial instruments. This material discusses broad market, industry or sector trends, or other general economic or market conditions, and it is being provided on a confidential basis.
It is not intended to provide an overview of the terms applicable to any products sponsored by Brookfield Corporation and its affiliates (together, “Brookfield”). Information and views are subject to change without notice. Some of the information provided herein has been prepared based on Brookfield’s internal research, and certain information is based on various assumptions made by Brookfield, any of which may prove to be incorrect. Brookfield may not have verified (and disclaims any obligation to verify) the accuracy or completeness of any information included herein, including information that has been provided by third parties, and you cannot rely on Brookfield as having verified any of the information. The information provided herein reflects Brookfield’s perspectives and beliefs as of the date of this material.
Opinions expressed herein are current opinions of Brookfield, including its subsidiaries and affiliates, and are subject to change without notice. Brookfield, including its subsidiaries and affiliates, assumes no responsibility to update such information or to notify clients of any changes. Any outlooks, forecasts or portfolio weightings presented herein are as of the date appearing on this material only and are also subject to change without notice. Past performance is not indicative of future performance, and the value of investments and the income derived from those investments can fluctuate.
Private Credit Risks
All investing involves risk. The value of an investment will fluctuate over time, and an investor may gain or lose money, or the entire investment. Past performance is no guarantee of future results.
As an asset class, private credit comprises a large variety of different debt instruments. While each has its own risk and return profile, private credit assets generally have increased risk of default, due to their typical opportunistic focus on companies with limited funding options, in comparison to their public equivalents.
Because private credit usually involves lending to below-investment-grade or non-rated issuers, yield on private credit assets is increased in return for taking on increased risk.
Forward-Looking Statements
Information herein contains, includes or is based on forward-looking statements within the meaning of the federal securities laws, specifically Section 21E of the Securities Exchange Act of 1934, as amended, and Canadian securities laws. Forward-looking statements include all statements, other than statements of historical fact, that address future activities, events or developments, including, without limitation, business or investment strategy or measures to implement strategy, competitive strengths, goals, expansion and growth of our business, plans, prospects and references to our future success. You can identify these statements by the fact that they do not relate strictly to historical or current facts. Words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe” and other similar words are intended to identify these forward-looking statements. Forward-looking statements can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Many such factors will be important in determining our actual future results or outcomes. Consequently, no forward-looking statement can be guaranteed. Our actual results or outcomes may vary materially. Given these uncertainties, you should not place undue reliance on these forward-looking statements.
ID B-667178