WSJ | Wall Street rushes to sell private credit to retail investors

What's new: Major investment firms including Apollo, BlackRock, and KKR are racing to launch private-credit ETFs and retail products, aiming to tap into the $1.7 trillion private loan market.

Why it matters: This push could give ordinary investors access to higher-yielding investments traditionally reserved for institutions, but raises concerns about putting hard-to-trade assets in easily tradeable funds.

The big picture: Private credit has delivered returns around 10% in recent years, attracting Wall Street's attention as institutional investors reach their allocation limits. The market is projected to double to $3.5 trillion by 2028.

By the numbers:

• Private credit currently makes up less than 3% of $150 trillion in global retail investments

• Firms expect retail allocation to rise above 10%

• The market is projected to hit $3.5 trillion by 2028

Key challenges include:

• Converting illiquid loans into easily tradeable fund shares

• Meeting SEC requirements for daily redemptions

• Maintaining high returns as retail money floods in

• Managing valuation difficulties during market downturns

The bottom line: While firms race to be first to market with private credit ETFs, regulators and market veterans remain skeptical about whether these complex assets can be successfully packaged for retail investors.

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