By Steve Dinnen Private credit is alive and (mostly) well as an investment opportunity, though not without a bump or two. The biggest hiccup occurred late last year, when JPMorgan Chase CEO Jamie Dimon made immediate headlines by observing that “when you see one cockroach, there probably are more. ” He was referring to a major car dealer and an auto-parts supplier that had recently collapsed, owing billions of dollars to banks and the private credit industry. Were more problems lurking? What about the massive disruption AI posed to Software as a Service businesses, like Adobe, Intuit and Palantir? Investors in private-credit firms like Blue Owl Capital headed for the exits, only to find the doors partly blocked. Thanks to a provision common in the industry, investors often can’t withdraw all their money at once, and firms may cap redemptions during periods of heavy demand. That’s because private credit — loans, equity stakes and real estate investments that aren’t publicly traded — is far less liquid than stocks on the NYSE. These redemption rules create a steadier flow of money for investors than the broader stock market, where dramatic swings have become increasingly common in the AI era. Consider Zscaler: Its shares climbed 33% over 14 trading days in May, then plunged nearly as much in a single day after the company issued an earnings outlook that disappointed investors. Brandon Grimm is chief investment officer at Gilbert Cook, a wealth management firm in West Des Moines. They advise many of their clients to invest in private credit, seeing it as a way to provide steady returns that likely won’t reach the extreme highs or lows of the public market. He expects private credit to post a return this year in mid- to high-single digits. By comparison, the Dow Jones Industrial Average is up 5.46% so far this year. Sponsors of private-credit funds are some of the nation’s largest asset managers. BlackRock, for example, oversees $14 trillion in assets. Ares Management is another major player favored by Gilbert Cook. Grimm said one advantage of private credit is diversification: Funds that invest in loans, equity stakes or real estate often spread their money across hundreds or even thousands of investments. That helps reduce risk. Still, “there are no risk-free investments,” he cautioned. Just ask a Zscaler shareholder. ...read more read less