Bob Long, CEO of StepStone Private Wealth Solutions, participated as a panelist in Asset TV’s Masterclass on Private Credit. The virtual event brought together industry experts to explore the growing appeal of private credit for financial professionals and their clients.
The Masterclass delved into the following topics:
- The asset class’s strong historical performance, low volatility and strategic role in portfolio diversification
- Key features such as floating-rate structures, covenant provisions and the illiquidity premium opportunities
- Breakdown of the major segments of private credit—including direct lending, specialty finance, and distressed strategies
Source: Cliffwater DL Index (Based on broad Cliffwater direct lending Index, which includes 30-50% Junior Debt. Senior Debt is expected to have lower drawdowns), as of December 2024. Past performance does not guarantee future results.
The StepStone Private Credit Income Fund (CRDEX) is registered as a non-diversified, closed-end management investment company that is operated as an interval fund and has limited operating and performance history that Shareholders can use to evaluate the Fund. Click here to review the Fund’s current portfolio characteristics. CRDEX is distributed by by Distribution Services, LLC which is not affiliated with StepStone Group Private Wealth or any other entity discussed in the recording.
Before investing you should carefully consider the Fund’s investment objectives, risks, charges and expenses. This and other information is in the prospectus, a copy of which may be obtained from StepStone Private Wealth at 704.215.4300 or by visiting stepstonepw.com. An investor should read the prospectus carefully before investing.
Mutual funds, private funds, equities, bonds, and other asset classes have different investment strategies and risk profiles, which should be considered when investing. All investments contain risk and may lose value. Investment objectives will vary greatly among all structures and directly impact the volatility of any given fund, however private market funds are generally expected to be more speculative than registered funds due to the differences in regulatory oversight requirements. While mutual funds are limited in the amount of illiquid and derivative investments they may make, closed-end funds have less limitations, and private funds generally have no restrictions on such holdings. The performance of private market funds is difficult to measure and therefore such measurements may not be as reliable as performance information for other investment products. In addition to the transactional fees and ongoing operating expenses contained within most fund structures, many private market funds often include an additional performance fee applicable to investors.
Diversification does not assure a profit nor protect against loss in a declining market. Any references to “protection” refer strictly to strategic investment goals and are not meant to imply any guarantee against loss. Holdings in private credit assets do not guarantee downside protection of an investment in the Fund and a complete loss of investor’s principal is possible.
An investment in CRDEX involves risks. The Fund should be considered a speculative investment that entails substantial risks, and a prospective investor should invest in the Fund only if it can sustain a complete loss of its investment. Fund fees and expenses may offset trading profits. Fund shares are illiquid and appropriate only as a long-term investment. There is no market exchange available for shares of the Fund thereby making them difficult to liquidate. Use of leverage may increase the Fund’s volatility. The Fund is non-diversified, meaning it may concentrate its assets in fewer individual holdings than a diversified fund. Investments may consist of loans to small and/or less well-established privately held companies that have reduced access to the capital markets, resulting in diminished capital resources and the ability to withstand financial distress.
Debt securities are subject to the risk that an issuer will be unable to make principal and interest payments on its outstanding debt obligations when due. Several factors may impair the ability of an issuer to make such payments and result in defaults on, and declines in, the value of its debt, including interest rate risk, prepayment risk, and adverse changes in the financial condition of an issuer. A significant portion of the Fund’s investments may be originated, which will depend on several factors, including the availability of opportunities for the origination or acquisition of target investments, the level and volatility of interest rates, the availability of adequate short and long-term financing, conditions in the financial markets and economic conditions.
The current lending market in which the Fund participates is competitive and rapidly changing, and the Fund may face increasing competition for access to loans (especially direct loans) as the lending industry continues to evolve. The fact that a loan is secured does not guarantee that the Fund will receive principal and interest payments according to the loan’s terms, or at all, or that the Fund will be able to collect on the loan should the remedies be enforced. Private Market Assets may include investments in fixed income securities rated investment grade or noninvestment grade (commonly referred to as high yield securities or “junk” securities) and may include investments in unrated fixed income securities, all of which may involve a substantial risk of default. Please see the prospectus for details of these and other risks.
Private credit investment yields are not guaranteed. The Funds seek to distribute substantially all net capital gains and net investment income on an annual basis. There is no guarantee that the Fund can or will pay distributions and a portion of distribution may be derived from return of capital.
Holding target returns are forward-looking and actual results may vary substantially. Projections are based on internal calculations and assumptions that are not guaranteed and do not imply investment results any specific investor should expect to receive.
References to “Evergreen Funds” generally describe non-traded registered closed-end funds or products that are continuously offered. Individual products provide different liquidity provisions and not all vehicles offer quarterly repurchase opportunities. As a fundamental policy, CREDX will offer to repurchase no less than 5% of the Fund’s outstanding shares at NAV on a quarterly basis. In the event that a repurchase offer is oversubscribed, Shareholders may only be able to have a portion of their Shares redeemed.
Volatility is a statistical measure of dispersion of return, specifically standard deviation.
S&P 500 Total Return Index is a variant of the well-known S&P 500 Index. It includes both the capital appreciation of the underlying stocks in the S&P 500 Index as well as any dividends paid by those stocks. It measures the total return of investing in the stocks comprising the S&P 500 Index, taking into account both price changes and dividends.
London Interbank Offered Rate (LIBOR) is a former global benchmark interest rate at which major banks lent to each other. It was widely used to set rates for loans, derivatives, and financial products.
The Secured Overnight Financing Rate’ (SOFR) rate published by the US department of the treasury.
Loan-to-Value (LTV) ratio is the percentage of a portfolio company’s total value compared to the size of the loan.
CRDEX will invest primarily in direct lending investment opportunities. To assess credit quality StepStone Private Debt places a strong emphasis on analyzing managers’ track record prior to co-investing with them. This involves collecting up to 120 data fields on all realized and unrealized transactions of managers. Our extensive track record analysis not only benchmarks against ‘peer’ managers, based on a standardized definition of defaults, but also enables a more comprehensive internal definition and credit rating mechanism to gauge and benchmark credit quality for respective yields. StepStone’s internal credit rating consists of two parts: “Facility Rating”: describes the probability of default and the expected losses in case of a default; “Performance Rating”: describes the fundamental performance of the borrower.
Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) is a portfolio company’s earnings before interest, taxes, depreciation and amortization.