Private Credit Myths Investors Still Believe
Even as private credit continues to mature, now a multi-trillion-dollar global asset class, a few myths still linger. They are resilient, sometimes amusing, and occasionally delay investor decisions. At Garrington, we dispel them the same way we underwrite loans, with clarity, discipline, and a quietly confident tone.
Myth 1: If It’s Private, It Must Be Risky
The word “private” can sometimes be misunderstood as “speculative.” In truth, risk in private credit is all about structure, collateral, and discipline. At Garrington, we focus on senior secured positions, tangible assets, and prudent advance rates. This is risk management, not risk chasing.
We addressed this in The Garrington Edge, Volume 27, where we discussed the risks of payment-in-kind interest structures and why we favour reliable cash flow and hard asset backing. It is one thing to chase yield; it is another to preserve principal while earning it. We choose the latter every time.
Myth 2: Once You Invest, Your Capital Is Locked Away for Years
That is true for some strategies, but not for ours. Our short-duration loans mean we often recycle capital multiple times a year. This flexibility allows us to adapt quickly to market changes without committing investors to long holding periods.
Myth 3: Borrowers Only Come to Private Credit When They Have No Other Choice
We hear this often, and it could not be further from reality. Many of our borrowers are strong, growing businesses that choose us over traditional lenders because we can move with speed, structure solutions creatively, and lend against tangible assets.
The same misconception sometimes extends to investors, who may see private credit as an opportunistic side allocation rather than a core part of a balanced portfolio. In reality, private credit has become an essential portfolio component, partly because of its potential for low correlation to public markets.
At Garrington, that non-correlation is not by chance. It is the result of a portfolio team that stays true to its mandate, focuses on quality underwriting, and prioritises the protection of investor capital. Performance is driven by disciplined lending and careful structuring, not by the daily movements of the market.
Myth 4: Private Credit Lacks Transparency
Some investors assume that because private credit is not traded on an exchange, visibility into holdings and performance must be limited. In some strategies and with some managers, that can be true.
At Garrington, transparency is one of our core principles. Investors have direct access to our senior management team, the same professionals who underwrite and manage the portfolio day to day. We walk investors through the composition of our loans, our credit process, and the rationale behind each structure.
We do not believe in the “trust us, it’s in there” model. Instead, we provide full look-through into our portfolio so investors understand exactly what they own and why it was chosen. This level of clarity is not just a service; it is part of our disciplined approach to protecting capital and building confidence.
Myth 5: If a Loan Defaults, the Investment Is Lost
Not necessarily. While defaults can occur, senior secured lending comes with built-in protections. Tangible collateral, covenant oversight, and proactive engagement allow us to navigate challenges and preserve capital when the unexpected happens.
Myths have been around since the Stone Age. In investing, we prefer facts backed by discipline and transparency.
Boutique Strength and Disciplined Repetition
Here is what truly sets us apart at Garrington. We combine boutique accessibility with repetition and refinement. Our senior team is approachable and hands-on, deeply involved in underwriting, monitoring, and portfolio construction. Investors have direct access to leadership to walk through our portfolio with full transparency.
We limit our portfolio to approximately 150 loans. That number is deliberate. It allows us to rinse and repeat a proven credit approach with clarity and consistency. It is not volume that matters; it is precision repeated over time that creates resilience and conviction.
Why This Matters for Investors
We understand your perspective. You want clarity, reliability, and thoughtful risk management. Myths thrive in the absence of information, so we build on transparency and disciplined execution. That is the foundation we lean on and the lens through which every loan is approved.
If you would like to explore any of these points in more detail, we welcome a conversation.
