In conversations with dozens of institutional investors over the past several months, consistent themes recur. First, there’s the sense of continually being bombarded by unexpected bad news rocking markets. Then having few clues before each Fed meeting what the central bank will do with rates. Finally, there’s the worry that too-high rates will send the economy into recession.

The net result of these pressures has been, no surprise, a “wait-and-see” approach. “We like private credit, but we’re cautious right now,” one fund manager told us. “We believe in the value proposition of the asset class and are pretty diversified in it, but not sure directionally if risk there has peaked. Investment grade bonds aren’t necessarily the solution either.”

Others who are not yet invested in private credit seem beset with FOMO. “Private credit looks attractive certainly,” another wealth manager said. “We’ve scheduled second quarter to commit to a direct lending allocation. It’s been late in coming for us, but public markets are too volatile. Our focus now is to understand portfolio sensitivity to higher interest rates.”