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
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.