New industry research by the Alternative Credit Council (ACC), the private credit affiliate of the Alternative Investment Management Association (AIMA), and global law firm Dechert, reveals that as the private credit market matures, managers are refining their fund structures to meet rising investor demands for liquidity, co-investment and bespoke solutions.

The report, ‘Trends in Private Credit Fund Structuring 2025’ is the second edition of ACC/Dechert’s research – updating the 2023 report – into this market theme and delves into the key drivers behind the development of more customised fund structures for institutional, retail, and insurance investors. 

The findings of this report are drawn from data and insights from 50 private credit managers managing ~ US$1.5 trillion in private credit assets and a series of one-on-one interviews with industry leaders.

Key findings include:

• Investor appetite for co-investment has surged: 92% of managers report an increase in investor demand for co-investment (up from ~70% in 2023).
• Investor demand for liquidity is rising: 64% of respondents report rising investor demand for liquidity (up from 49% in 2023), with two-thirds of managers surveyed now having at least one vehicle offering investors some form of periodic redemption (up from around half in 2023).
• Leverage usage remains modest and targeted: 72% of managers employ some leverage (typically 1.0-1.5× NAV) in their private credit strategy, either at the fund or asset level.
• Growing retail participation: Over 50% of managers currently serve high-net-worth or other retail clients; two-thirds are targeting retail capital for new funds.
• Insurance allocations: Rated note feeders are increasingly used as a structuring tool for insurance capital, with 63% of managers having considered them for US insurers, 35% for European and Asian insurers.
• Trusted domicile choices: Luxembourg, Cayman, the US and Ireland remain the top domiciles, with many managers running parallel vehicles to address investor preferences.
• Fee innovation: Approximately two-thirds of respondents use tiered management fee schedules and continue to innovate fee models in response to competitive fundraising pressures.

Global Head of the ACC Jiří Król, said: “Our new research shows the importance of structuring for investors in private credit – adding value while also allowing investors to tailor their exposure and manage risks. Investor demand for liquidity and co-investment is being met by private credit managers who take the same long-term outlook to their product design as they do to their investments.” 

Claire Bentley, Partner at Dechert, said: “Effective fund structuring is at the heart of private credit’s evolution. Managers who can offer enhanced liquidity, including evergreen vehicles, alongside customised products, flexible fee models and co-investment opportunities are positioning themselves to meet the nuanced demands of institutions, insurers and high-net-worth clients. Our research shows that those who master these tools can expand their investor base without sacrificing the reliable returns that define the asset class.”

Arina Lekhel, Partner at Dechert, said: “Our 2025 study underscores private credit’s evolution into a truly bespoke asset class. Managers are innovating with evergreen and hybrid vehicles, rated note feeders for insurance allocations, targeted leverage and tiered fee models to deliver the periodic liquidity and co-investment features investors now demand, all while preserving the stable, income-driven profile that defines private credit.”

Media Contact:
Drew Nicol
Director, Research and Communications, AIMA
[email protected]

FAQs

Does “more liquidity” mean daily dealing? 

No. Private credit managers have expanded the use of evergreen and hybrid fund structures that offer some liquidity to investors. In practice, most of these vehicles offer regular subscriptions alongside periodic or limited redemption opportunities. Managers are careful to align the availability of liquidity with the liquidity profile of the underlying assets. Managers also make use of Liquidity Management Tools (LMTs) to ensure that there are no liquidity mismatches. These include notice periods, investor and fund level gates, periodic redemptions, slow pay structures, lock ups, among others. 

Are private credit products now being offered to regular savers?  

Retailisation has taken place mostly at the level of HNW and semi-professional investors, rather than mass retail.  Retail investors can access the asset class typically via parallel vehicles, though managers have established partnerships with wealth management platforms and private banks to distribute their products. Any products marketed to retail clients are subject to any relevant disclosure and conduct requirements. Alongside the operational requirements, firms are also making considerable investment in their marketing and educational materials to support retail clients’ understanding of the market and set clear expectations around issues like the limited liquidity of private credit assets.  

When do rated feeders make sense for insurers?

Rated not feeders are an important option in the range of structures available to manage insurance capital.  While these structures can optimise capital charges (e.g., NAIC look-through ratings) and have penetrated the market globally at different rates, they present significant complexities, costs and challenges.  For example, they require scale and third-party equity, as well as careful thinking around the economics of the structure.  Many investors prefer simpler structures with transparent reporting.

How have fees evolved in private credit?

Fee models evolve in response to investor demands, industry maturation and market trends. A majority of managers now use tiered management fee schedules and offer breaks for larger commitment sizes, as volume-based pricing has become common in the sector. The backdrop of these trends is a highly competitive fundraising environment and consolidation of capital in the larger managers and LPs.  As a consequence, managers are incentivised to introduce creative fee terms to stay competitive. 

Are private credit funds leveraged?

The use of leverage in private credit remains modest. Leverage levels have historically been moderate, with around two-thirds of managers employ leverage either at the asset- or fund-levels but leverage commonly oscillating around 1.0–1.5× NAV. These leverage levels have remained stable over the past decade, even though managers and investors have increasingly become comfortable with using moderate levels of borrowing.  Leverage in private credit has key purposes beyond supporting investor returns, with managers mostly employing borrowing such as subscription line facilities to manage cash flows and improve their operational efficiency.  Banks continue to be the main lenders to private credit funds, which allows the banking sector to indirectly provide financing to the real economy from a more secure and over collateralised position compared to if they were lending to the same borrowers directly.