Donald Trump has cleared away legal barriers to employers that want to let workers put their 401(k)-retirement money into riskier but potentially higher-yielding assets like private equity, real estate funds and so on.
The US President asks if big institutions and rich people do it, why shouldn’t everyone else? Well Rana Foroohar argues in her latest column that the government shouldn’t be encouraging average Americans to go into such alternative investments right now because they are likely entering the very tail-end of a risky credit cycle that could blow up.
“This isn’t a radical statement. It has become widely understood that, following the global financial crisis of 2008, risk moved from the formal banking sector into the private credit market,”
she writes.
But to understand why this moment is so very delicate, it is important to look at history.
Rana Foroohar concludes with a historical comparison.
There’s no question we are at the tail-end of another private credit cycle. The only question is how it ends, and who gets hurt. When the junk bond market collapsed, it was worth a little over 3 per cent of the entire US economy at the time. Today, private credit is about $2tn, more than double that figure as a percentage of the US economy. Add to that global conflict, energy inflation and an AI bubble. Slow deer, beware.
Read on and you will find ways to get to grips with what’s happening!
Elsewhere the FT reports
This article is from Alan Livsey who has taken over during the maternity of Mary McDougall. He’s used to talking about assets, I hope he’ll find a little on this blog (especially from the comments) to get a feel for pension investment in the UK!
US Pension credit – How worried should we be?
On Thursday I hope to ask the question of this blog to a panel of experts (put together by the FT).
Quite a lot of my money is in the Nest Pension and I’m not best pleased by the juxtaposition of these two articles!
My DB scheme is also at risk of being carted off to Bermuda in a buy-in/buy-out involving reinsurance funding that (as I’ve reported on this blog) will see more money going into US private credit.
I am far from convinced that we are at the right stage of the wave’s development!
A chance to find out more on this.
If you are free at 1pm and subscribe to the FT, you can join using the link on this tweet.
— Henry Tapper (@henryhtapper) April 13, 2026
Here is the Nest’s press release (thanks to Corporate Adviser)
Nest awards Crescent Capital £450 million in private credit deal
Workplace pension scheme Nest has appointed Crescent Capital Group in a £450 million deal to manage an open-ended mandate investing in secured, first-priority loans to private companies.
The investment is part of Nest’s long-term strategy to diversify its portfolio through well-structured private credit opportunities and its ambition to allocate 30% of its AUM to private markets by 2030.
The partnership provides Nest with access to the US private corporate lending space. Under the evergreen mandate, Crescent will originate secured, first-priority loans directly to US middle market companies, with a focus on non-cyclical businesses across various sectors including healthcare, technology, consumer and industrial.
Rachel Farrell, director of public and private markets at Nest Invest, says:
“As we broaden our exposure to global credit markets, it is essential that we do so through managers with strong business models, well-resourced teams and differentiated investment expertise.
“We are therefore pleased to appoint Crescent, whose extensive sourcing capabilities, disciplined underwriting, focus on credit quality and strong track record across market cycles make them a trusted partner as we continue to build and diversify our portfolio.”Founded in 1991, Crescent manages $50 billion in assets and focuses exclusively on corporate credit.
US Private credit!!! are they out if their minds?
Which layer is being dumpt on them?
Have they ever looked at mortgage back securities history!!!
Private Credit is desperately looking for a source of liquidity in order to provide themselves with an exit before the plates stop spinning, and Retail investors are being lined up as the liquidity source to provide that exit for them.
Regulators should be all over this, and pushing back strongly against Government here and abroad attempting to steer investors into Private markets, else this has all the signs of being the next misselling scandal.
https://youtu.be/9z70BKwfSUA?si=gt8pQKZVaC3ol6Pj
The answer
Hello Henry,
Is now the time for Nest to invest £450m into US private credit?
Blue Owl, anybody…?
I think that the lady has a good point. In fact I have commented a couple of times recently regarding the take-over of reliable UK businesses e.g. Just, by USA companies and what the consequences might well be in the case of difficulties or failure i.e. beyond the UK Judiciary.
In regard to the above headline, the New York Times (NYT) has lately been concerned regarding the security of private credit funds. They have recently published, in connection with the Blue Owl difficulties:
‘…For the past few months, some of the biggest asset managers on Wall Street have engaged in a full-press effort to persuade wealthy investors and financial advisers to keep money in so-called private credit funds that invest in risky loans.
It’s not working.
….Founded by veterans of Wall Street firms like Goldman Sachs, Blue Owl exploded in size over the past decade. The private credit industry has collected trillions of dollars from large and small investors alike to lend to fledgling companies that either could not or would not find funding from traditional banks.
Some investors are less convinced, noting that the industry has so far been buoyed by relatively low interest rates, among other factors…’
2008…anybody?
The NYT is also very concerned regarding President Trump’s recent 401(k) proposal viz:
‘…Wall Street cheered when the Trump administration proposed a rule that would clear the way for 401(k) plans to include private equity, private credit, real estate and cryptocurrency. But the effort may not protect employers that add these sorts of alternative assets to their workers’ retirement plans as much as President Trump would like…’
Such ethics may well hold implications for UK pension funds that are held by American businesses.
Good luck with your question on Thursday.
Kind regards,
Tim Simpson