According to iCapital, private credit refers to “tailored financing options – typically loans – that are directly made to strategically identified companies by non-bank lenders. These…may include direct loans, distressed debt, asset-based loans or specialty finance solutions.”

Unfortunately, the term has become a stand-in for bubble risk, panicking retail cash, and scavenging insects. This framing stereotypes the asset class and ignores the more disciplined, historically grounded aspects of the market.

Understanding the history of private credit can shed light on how the industry evolved, and why painting all managers with the same brush today clouds the strength of the underlying fundamentals that made its popularity with investors possible in the first place.