Aug 17, 2026
Asset-backed Finance
Asset-Backed Finance: A market segment coming into focus
When private credit makes the news, it’s lately about one specific corner of the market: corporate direct lending, which are loans to companies often used to finance buyouts.
But it’s not the whole story.
There’s another form of private credit that’s been around for decades, backed by real, tangible assets, and it’s drawing serious attention from institutional investors right now. It’s called asset-backed finance (ABF). ABF loans are typically secured by identifiable assets, not just a company’s promise to repay.
You probably understand ABF better than you think. Here are a few examples:
When a bank finances a fleet of aircraft
When credit card receivables are packaged into a security
When private capital funds a pool of auto loans
Royalty streams from pharmaceutical patents or entertainment rights
Why now?
The ABF market is massive—an estimated $7 trillion globally1—but private capital still represents only a small slice of it. As traditional banks pull back from this type of lending, a gap opens up. And private investors are potentially well-positioned to help close it.
In other words: the private credit story isn’t just direct lending. There’s a quieter, asset-backed segment, and we believe the timing looks interesting.
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KEY RISKS
Private investment funds (including, without limitation, hedge funds, funds of hedge funds, private equity funds, real estate funds, etc.) are subject to special risks, including risk of loss of the entire investment and is suitable only for investors with sufficient knowledge and sophistication to evaluate the merits and risks of such investments. As a reminder, private investment funds often engage in leveraging and other speculative investment practices that may increase the risk of investment loss. These investments can be highly illiquid, and may not be required to provide periodic pricing or valuation information to investors, and may involve complex tax structures and delays in distributing important tax information. Distributions are not guaranteed and may be modified at the Fund Board’s discretion. These investments are not subject to the same regulatory requirements as mutual funds; and often charge high fees (performance fees in addition to management fees). Further, any number of conflicts of interest may exist in the context of the management and/or operation of any such fund. For comprehensive details around unique set of risks for specific alternative investments, please refer to the applicable offering memorandum.
Investing in alternative assets involves higher risks than traditional investments, including, without limitation, limited liquidity and valuation risk, and is suitable only for investors with sufficient knowledge and sophistication to evaluate the merits and risks of such investments. Alternative investments should not be deemed a complete investment program and distributions are not guaranteed. They may not be tax efficient, and an investor should consult with their tax professional prior to investing. Alternative investments often have higher fees than traditional investments and they may also be highly leveraged and engage in speculative investment techniques, which can magnify the investment loss or gain—including risk of loss of the entire investment. For comprehensive details around unique set of risks for specific alternative investments, please consult the offering memorandum.
