Expert insight
Private credit: Why fundamentals beat headlines
April 20, 2026
In this video clip, Vanguard Global Chief Economist Joe Davis encourages investors to step back from the headlines and focus on fundamentals regarding private credit. He notes that periods of pressure and company failures are not unique to private markets and also occur in public ones.
An important question is whether investors understand what they own and why, Davis said in a recent discussion with Christine Kashkari, editorial director of WSJ Custom Programming and co-host of the Better Vantage by Vanguard podcast series.
Rather than reacting to short-term news, Davis emphasizes the importance of revisiting the role private credit is meant to play in a portfolio and weighing expected returns, net of fees, against the risks involved. Applied consistently, that discipline matters more than any single market narrative.
Read the transcript
Christine Kashkari: So, Joe, we've seen growth in private credit and along with it, a lot of headlines raising concerns about risks not just in private credit but also private markets in general. Are these unfounded?
Joe Davis: I think there's an important question that you could ask of private assets, but I would extend it to even public markets as well, Christine. And what I mean by that is there's always instances where you'll have pressure on individual companies. So companies fail in the public sector, which is why I think investors need to know two things.
They need to know what they own, and they have to have either an investment vehicle or an asset manager or an advisor, that is doing the due diligence on those holdings and companies. And are the risk positions in the funds appropriate for what they're trying to achieve in their portfolio? I would have said it 10 years ago, I would say it today, I would say it 10 years from now.
I would just encourage investors, if they're concerned about those headlines, let's take a breath and let's zoom out and say, what was the role of this asset in the portfolio to begin with, our strategy? And then, do we have a good handle on the risk factor exposures and what it's going to do for me in my portfolio? What is that net-of-fee return expectation? And is that worth the risk that I'm incurring? And just continually have that conversation, regardless of what the headline is in the marketplace today.
Notes:
All investing is subject to risk, including the possible loss of the money you invest.
Diversification does not ensure a profit or protect against a loss.
This content was created by Custom Content from WSJ, a unit of The Wall Street Journal Advertising Department.
Private investments involve a high degree of risk and, therefore, should be undertaken only by prospective investors capable of evaluating and bearing the risks such an investment represents.
Investors in private investments generally must meet certain minimum financial qualifications that may make it unsuitable for specific market participants.
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