Even when comparing individual portfolios, the distinction is less pronounced than many investors might expect. On average, private credit funds share roughly 20% of their borrowers with peers, suggesting a meaningful degree of common exposure across the category.
That similarity becomes even more striking at a broader level with semiliquid private portfolios differing from one another about as much as comparable public strategies, such as small-cap equity or bank-loan funds. In other words, while these funds are not identical, their level of differentiation resembles what investors already see in less-liquid corners of public markets.
Fees in context
Fees, in that context, take on greater importance. When portfolios begin to look alike, cost structures can become a primary driver of long-term outcomes.
Many private equity strategies operate as fund-of-funds, allocating capital to the same underlying vehicles. In fact, roughly a quarter of funds in the category hold stakes in the four most widely owned private equity funds, underscoring how concentrated exposures can become.
Private credit markets show similar patterns. While loans are not syndicated as broadly as traditional bank loans, the average borrower still appears in about 3.5 different direct lending portfolios, indicating that fully unique deals are relatively uncommon.