Leading with a More Holistic Approach to Building Credit Portfolios

Credit markets have grown rapidly over the past decade. In 2025, private credit accounted for roughly 27 percent of the $3.9 trillion US leveraged credit market, more than double its 13 percent share just a decade earlier. Forecasts suggest that private credit will continue to gain market share.

With growth comes structural change. Traditional public-market issuers are increasingly weighing the merits of public versus private execution and pledging fealty to neither. Secondary markets for private credit are changing the liquidity profile of private debt and leveling the empirical volatility playing field. Meanwhile, the retail-ization of private markets is broadening access and accelerating the flow of capital across channels. The result is a credit ecosystem in which the old lines of demarcation are becoming obsolete.

Despite these shifts, many credit portfolios remain organized around an increasingly outdated assumption: that public and private credit can—and should—be managed separately. That assumption is increasingly hard to defend in today’s market environment, given the fluidity of both capital and borrowers across public and private markets. 

Market knowledge, credibility, and trust are earned from decades of public and private credit execution. 

Leadership is no longer defined by specialization. It is defined by clarity: the ability to see the full playing field, understand how risks and opportunities migrate across it, and make disciplined decisions in the face of noisier signals and faster change. 

Historically, public and private capabilities existed in parallel universes, often with separate teams and processes. In this rapidly evolving market, public and private credit need to be managed together. By definition, active managers will lead the way. Those with expansive, integrated credit platforms will have visibility across the marketplace and into repositories of value, adjusting their strategic and tactical allocations in response to shifting dynamics. 

Siloed portfolio construction can obscure risk as much as mitigate it. Investors may believe they are diversified because exposures sit in different sleeves, even as underlying industries, sectors, issuers, and macro sensitivities overlap across their portfolios. The shakeout in software-as-a-service is a more recent example. We must move beyond labels and wishful empiricism toward a more holistic and fundamentals-based understanding of how credit behaves across markets and cycles.

Effective managers must not rely on a single set of signals. They must build multidimensional frameworks that allow them to assess relative value across a continuum that encompasses risk, return, and liquidity objectives. They must carefully consider embedded risks and opportunities of structural and financial leverage.

Critical prerequisites for success are public market expertise, a robust understanding of structured credit, and a global origination network to access differentiated deal flow. This collaboration lets investors evaluate the full scope of public and private opportunities and identify the best relative value. Pairing the broad spectrum of credit options against investors’ liquidity and risk tolerances then helps identify a feasible public-private mix.

One of the most persistent simplifications in credit investing is that liquidity is binary: Public equals liquid, and private equals illiquid. In practice, liquidity is a spectrum at best and ephemeral at worst. Strategies from direct lending and private asset-based finance to securitized products and opportunistic credit live along this spectrum, and investors must think carefully about the ex-ante liquidity needs in conjunction with their alpha requirements.

Leadership should not be measured by short-term outcomes and trend-following, but by resilience across cycles and principles-based convictions. Investing across public and private fixed income is embedded in the history of PGIM. Prudential made its first private corporate loan in 1948 and has nearly 150 years of real estate lending experience. Market knowledge, credibility, and trust—from both borrowers and investors—are earned from decades of public and private credit execution. 

Looking forward, investors will likely benefit from diverse, actively managed strategies that combine underwriting discipline with the experience of managing assets through a variety of cycles. As asset managers, we must thoughtfully implement strategies for managing hybrid credit portfolios. This means working closely with our clients to customize portfolios to their multidimensional investment goals. 

In this one-credit era, leadership is no longer about choosing sides. It is about building the perspective, tools, and judgment required to lead across the credit continuum. With a holistic framework, investors can achieve better outcomes.