Foreword
The Alternative Credit Council and Dechert LLP are pleased to share the findings of our latest research exploring current fund structuring and product design trends in private credit. This builds on the findings of our initial 2023 paper, providing a time series of data on product design trends as well as new insights on investor preferences.
Private credit has become one of the most dynamic and influential segments of global capital markets. As the industry matures, so too does the need for clear insights into how funds are structured, governed and accessed by investors. This report provides timely and practical analysis that will benefit investors, asset managers and policymakers alike.
For investors, the findings offer a unique window into how managers are responding to their evolving demands. Our research highlights how the needs of investors are reshaping fund structuring across multiple dimensions - liquidity, leverage, customisation, retail participation and the specific needs of insurers, as well as the need for tax neutrality and fee structures which align interests. These insights will enable investors to better evaluate fund offerings, assess alignment of interests and make informed decisions that match their portfolio objectives.
For asset managers, the report highlights the tools and structuring solutions that their peers are deploying to remain competitive. The research captures both the opportunities and the operational complexities that managers must navigate when serving their clients. This is particularly true in the way that firms are developing products aimed at retail clients and investing in ‘retail grade’ product, operations and marketing teams. This allows firms to integrate retail investors into their investment strategies alongside institutional clients.
We see a similar pattern for firms with insurance clients who require a specific combination of structuring and transparency from private credit fund managers. The experience of US managers using rated note feeders provides valuable insights for non-US managers and investors into the specific benefits and complexities of these structures.
The paper also provides regulators and policymakers with data and insights into a sector that is often accused of opacity. The research shares valuable insights into how private credit funds are tailored to serve the specific needs of their clients, and how the sector is successfully overcoming operational challenges and building sustainable ways for investors to manage their exposures. The findings also shed light on how managers and investors adapt their structuring considerations to different regulatory frameworks, as well as lessons on global practices that can assist policymakers seeking to support capital formation and boost investor confidence in private markets.
We would like to thank the firms and individuals who supported this research and contributed their time and expertise. We hope that investors, private credit managers and policymakers will find our data and insights useful.
Executive Summary
Increased demand for liquidity, customisation and co-investments
- 64% of survey respondents report rising investor demand for liquidity, up from 49% two years ago. 66% now operate at least one vehicle allowing investors periodic redemptions, with private credit fund managers using a broad range of liquidity management tools in their funds to offer a limited degree of liquidity.
- LP demand for co-investment vehicles has surged from 70% to 92% between 2023 and 2025. Investors are seeking tailored solutions, which is driving widespread use of SMAs, side letters and co-investments.
- The prevalence of small bespoke vehicles is declining, with far fewer managers (6% in 2025 v. 23% in 2023) willing to offer SMAs below US$50 million commitments than in prior years.
- The use of leverage in fund structures remains moderate and stable overall. 72% of respondents employ leverage in their private credit strategy either at the fund or asset level, a proportion largely unchanged from recent surveys.
Retail investors need retail-grade infrastructure
- 57% of surveyed managers have retail clients, with 64% considering targeting retail capital in upcoming funds. The biggest growth is in the HNW and “semi-professional” investor segments rather than mass retail, though managers are increasingly interested in the latter.
- Private credit fund managers are growing this client base through a mixture of feeder funds, partnerships with wealth management platforms and private banks, as well as through regulated vehicles that can be marketed to retail clients.
- Firms are making considerable investments in their operational infrastructure, as well as their marketing and educational materials to support retail clients’ understanding of the market.
Structuring and transparency paramount for insurance investors
- While many insurers participate in the market via traditional funds or simple feeders, rated note feeders have emerged as a critical structuring tool for insurance companies investing in private credit – 63% of respondents have considered setting them up for US clients, while 35% have considered setting them up for European and Asian insurers.
- Rated feeders can be resource intensive and have structuring challenges that may not always make them suitable for investors. Insurers are also gaining indirect exposure to private credit by acting as lenders to private credit funds.
- Regulatory capital treatment for private credit assets remains a key consideration for European investors, with hope that reforms under consideration in the UK and EU will provide more certainty.
Certainty and transparency driving fund formation
- Investors retain a preference for a handful of established fund domiciles. Luxembourg, the Cayman Islands, the US, Ireland and UK remain the top five domiciles for private credit funds.
- US tax considerations are an integral part of fund structuring discussions for any fund with exposure to US private credit assets. 33% of respondents now use double tax treaty-based vehicles and there has been an uptick in respondents that rely on treaty and blocked structures compared to prior years. Alternative strategies like ‘season and sell’ are also being employed, though there is no one-size-fits-all solution.
- 66% of respondents now use tiered management fee schedules, often taking in several variables. Investors continue to seek transparency beyond headline management and performance fee rates when assessing how remuneration structures align private credit managers’ interests with their own.