Private Credit's Public Shadow: What Institutional Positioning Shows, and What It Can't

By Kresmion Research · June 9, 2026

Private credit has grown into a roughly $2 trillion industry that ordinary investors cannot buy directly and that even regulators say they cannot see clearly. So we looked at the one part anyone can watch: how the roughly 21 institutional funds Kresmion tracks, mostly large hedge funds plus Berkshire Hathaway, are positioned in private credit's public proxies. The short version is that this tracked money sits in the big diversified managers, not the lending vehicles, though whether that even reflects a private-credit view is something 13F filings cannot tell us.

This is a description of where a tracked slice of public-market money sits and what the credit backdrop looks like. It is not advice and not a forecast. Kresmion can only see the public shadow of private credit, not the private industry's own books.

Key takeaways

What private credit actually is

Private credit, often called direct lending, is lending done by investment funds instead of banks. A fund makes a loan straight to a company, usually a mid-sized business already owned by a private-equity firm, that is too small or too bespoke to easily borrow from the bond market.

The loans have a recognizable fingerprint. They are floating-rate, so the interest resets with central-bank rates. They are illiquid and meant to be held until repaid, because there is no deep market to trade them in. And because there is no live trading price, the fund estimates what each loan is worth every quarter using its own assumptions. That last trait, valuing by model rather than by market, is the crux of most of the debate.

It is easy to confuse private credit with things it is not. Public high-yield ("junk") bonds are fixed-rate, registered, and trade every day at a visible price. Broadly syndicated leveraged loans are arranged by banks and sold to many buyers, so they too have observable prices. Private credit keeps the whole loan inside one fund, with no syndication and no market price. And unlike a bank, a private-credit fund is funded not by deposits that can be withdrawn on demand but by investor capital locked up for years, with lighter regulation and no public safety net. The loan can look similar; the funding structure behind it is fundamentally different. Risk that used to sit on regulated bank balance sheets has moved onto investors.

The industry grew for several reasons at once: banks retreated from this kind of lending after the post-2008 capital rules, floating-rate loans became attractive as rates rose, pensions and insurers wanted steady yield, and the expansion of private equity created a reliable pipeline of borrowers. The Federal Reserve's Lisa Cook noted in November 2025 that private credit has roughly doubled in five years.

The two ways to own it as a stock

Because the actual private-credit funds are private, a public-market investor gets exposure in one of two very different ways, and conflating them is the single biggest source of confusion.

The first is to buy a big alternative-asset manager: Apollo, Ares, Blackstone, KKR, Blue Owl, Carlyle, or Brookfield. Their listed stock is the management firm, not the fund. You own a fee-generating business that earns management and performance fees across many strategies. These firms differ in how credit-centric they are. Ares, Blue Owl, and Apollo (whose growth runs through its insurance arm) are built largely around credit. Blackstone, KKR, Carlyle, and Brookfield run big credit arms, but private credit is one slice alongside private equity, real estate, and infrastructure. Buying their stock is a bet on the whole platform. (Brookfield is a special case: the ticker BN is Brookfield Corporation, the parent that also invests its own balance-sheet capital directly into deals, which is distinct from BAM, Brookfield Asset Management, the asset-light pure-fee arm it controls.)

The second is to buy a business development company, or BDC, such as Ares Capital or Blue Owl Capital Corp. A BDC is itself the vehicle that holds the loans: a listed fund, created under the Investment Company Act of 1940, whose portfolio is a book of senior-secured floating-rate middle-market loans, and which passes most of its income to shareholders as dividends. It is the closest a public investor can get to owning the asset itself.

One useful way to hold the difference in your head: owning a manager is like owning a slice of the casino, collecting a cut on all the money flowing through. Owning a BDC is like sitting at the table holding the chips, earning the loan income but also wearing the losses if borrowers do not pay. The analogy is not perfect, since managers do co-invest their own capital (Brookfield especially), so the house is not entirely without chips on the table. Note that the same brand can appear in both forms. Ares Management (ARES, the firm) and Ares Capital (ARCC, the BDC) are different securities, which is exactly where investors get tangled.

Where the tracked money actually sits

This is the part Kresmion can measure. Across the roughly 21 institutional funds whose 13F filings Kresmion tracks, here is how the listed private-credit proxies were held as of the most recent quarter (positions as of March 31, 2026):

Two things stand out. First, the money is overwhelmingly in the big diversified managers, with Brookfield alone larger than every BDC these funds hold combined by roughly ten to one. The pure lending vehicles barely register. One caution before reading too much into that: this is a hand-selected list of tickers, and the roughly 21 tracked funds skew to large hedge funds and Berkshire, the kind of investors who rarely hold income-and-dividend BDCs regardless of any view on private credit. Ares Capital (ARCC), the largest US BDC, does not appear in the tracked holdings at all, but that is as likely a coverage gap as a verdict. So what the data can say is narrower than it first looks: these funds hold the managers far more than the lending vehicles. What it cannot say is whether that is a private-credit view, because for Brookfield, Blackstone, TPG, Carlyle, and KKR, private credit is a minority of a much larger business.

Second, the names that are purest private credit, Ares and Blue Owl, attract the least money. The biggest position by far, Brookfield, is also one of the most diversified, so it is not a clean private-credit signal at all. In plain terms, the cleanest read on private credit draws the smallest bets.

The conviction, and the recent trimming

The positioning is not static. In late 2025, the single most concentrated position was Brookfield. Pershing Square held $2.82 billion of it and added nearly 50% in the quarter; Lone Pine surged its position 56%; Third Point added 33%. Lone Pine was also adding KKR.

Into the most recent quarter, the picture was mixed rather than a clean move in one direction. The combined Brookfield position fell about 21%, Apollo's holders trimmed as Tiger Global's large stake came down, and KKR collapsed to $95 million as Lone Pine's position rolled off. But Blackstone, the next-largest diversified name, went the other way and rose over the quarter, even though Citadel had cut its own Blackstone stake 24% a quarter earlier; other funds more than offset that one cut. The two credit-purest names also grew off a small base: Blue Owl more than doubled and Ares rose. So this is not a tidy rotation out of the diversified giants and into the pure lenders. Brookfield, Apollo, and KKR came down while Blackstone and the credit-pure names went up. The one fair summary is narrow: the single most concentrated position, Brookfield, was trimmed rather than pressed even as the systemic-risk conversation grew louder.

The backdrop: spreads this calm are the whole debate

All of this is happening against an unusually quiet credit market. The high-yield spread, the extra yield investors demand to hold risky corporate debt over Treasuries, sits at 274 basis points, and the investment-grade spread at just 74 basis points. The high-yield figure is roughly half a long-run average commonly cited around 500 basis points (the median is somewhat lower), and near the tight end of the cycle. Kresmion's macro regime reading is Neutral with high conviction, and its credit sub-signal shows no stress in spreads.

That calm is precisely what the warnings are about. The Financial Stability Board's first dedicated report on private credit put the market at $1.5 to $2.0 trillion at end-2024 and flagged that it "remains untested in a prolonged economic downturn," citing valuation opacity, interlinkages with banks and insurers, and a liquidity mismatch in funds that offer redemptions while holding untradeable loans. The IMF's October 2025 Global Financial Stability Report made the same core point: the sector's growth is "revealing new financial stability risks" that are hard to map. Governor Cook called private credit a vulnerability "worth watching," noting that its reassuringly low default rates are "backward-looking" and can be flattered by borrowers paying interest with more debt rather than cash. Moody's warned that rising complexity could "amplify risk in novel ways."

The headlines have given those warnings some teeth. The September 2025 bankruptcies of auto-parts supplier First Brands, which collapsed with about $10 billion of debt and billions in undisclosed off-balance-sheet financing, and subprime auto lender Tricolor, which cost JPMorgan around $170 million, prompted JPMorgan's Jamie Dimon to warn that "when you see one cockroach, there are probably more." And in the first quarter of 2026, several BDCs marked down their loan books, with a group of 14 large BDCs valued about 1.5% below cost, the first such markdown cluster after a long stretch of near-zero reported losses. In June 2026, Blackstone capped redemptions from its roughly $79 billion BCRED private-credit fund at 5% of shares after withdrawal requests reached about 10%, the first such cap for that fund, with other large semi-liquid vehicles taking similar steps. That is the liquidity-mismatch the FSB described, in practice.

The industry pushes back hard, and not without evidence. Ares argues that "private credit is just credit", pointing to roughly 1% net annual losses over two decades, comparable to or better than public high-yield. Defenders note that the capital is locked up for years, so there is no bank-run dynamic; that most loans are senior-secured and first in line on collateral; that fund leverage is typically modest, often cited around one to one-and-a-half times; and that the 2025 Fed stress test did not flag bank exposure to private credit as a systemic risk. The honest summary is that this is a live argument about opacity and untested assumptions, not a settled verdict.

What this is and is not

A few things are worth stating plainly, because they bound what any of the above can mean.

Kresmion has no direct private-credit data. We do not see fund assets, default or non-accrual rates, payment-in-kind income, or the actual marks on the loans. Everything here is the public-equity shadow of the industry, a measure of sentiment and positioning, not of credit fundamentals.

The positioning data is a tracked sample. It covers roughly 21 institutional funds, not the whole market, and 13F filings are disclosed 45 days after the quarter ends, so the snapshot is already a couple of months old. The managers are diversified businesses, so a big position in Brookfield or KKR is only partly a private-credit bet. And this is a description of a moment, not a prediction. Tight spreads can stay tight for a long time, and the debate above is cited here, not resolved.

Frequently asked questions

What is private credit in simple terms?

It is lending by investment funds instead of banks. A fund lends directly to a mid-sized company, usually at a floating interest rate, and plans to hold the loan until it is repaid rather than trade it. Because there is no market price, the fund estimates the loan's value each quarter using its own model, which is the feature most of the debate centers on.

How can a regular investor get exposure to private credit?

Two ways, and they are quite different. You can buy a listed alternative-asset manager such as Apollo, Ares, Blackstone, KKR, or Blue Owl, which means owning a fee-earning business with private credit as one line. Or you can buy a publicly traded BDC such as Ares Capital, which holds the loans directly and pays the interest income, but also carries the credit risk. Owning the manager is more like owning the casino; owning the BDC is more like sitting at the table.

What does Kresmion's data actually show about it?

That the roughly 21 funds Kresmion tracks hold the big diversified managers far more than the pure-play BDCs, led by Brookfield at about $3.07 billion versus around $314 million across the entire tracked BDC complex. The credit-purest names, Ares and Blue Owl, draw the least money. Because these managers are diversified businesses, this describes where a tracked slice of public-equity money sits; it is not proof that any fund is making a private-credit bet, and not a view on whether the loans are sound.

Is private credit a bubble?

That is exactly the open question, and Kresmion does not answer it. Regulators including the FSB, IMF, and Federal Reserve have flagged opacity, valuation lag, and an untested downturn as risks worth watching, while the industry points to low historical losses and locked-up capital. The credit-spread backdrop is unusually calm, which both sides read differently. Kresmion publishes what the data shows and where the debate stands, and stops there.