"Boost diversification": How you can benefit from the great opportunity in private credit

This interview was filmed on 13 November 2025.

Private markets have remained a fairly niche option for retail investors, due mostly to issues around accessibility and understanding. 

But developments in public markets, and the rise of private market investment options, are slowly changing the equation, says Betashares' James Fleiter, Director - private assets.

"These investments are far more accessible than they've ever been before, and that's a great opportunity for investors to generate better risk-adjusted returns," says Fleiter.

"87% of companies in the United States that earn more than a hundred million dollars in revenue are private companies," he said. "Because there's such a huge pool of companies that people aren't already invested in, you can really boost diversification in your portfolio."

Private markets now offer a legitimate alternative, says Fleiter. "Access has come an incredibly long way in the last 10 years."

Fleiter says Betashares' recent move into private markets, through its Betashares Private Capital division, is the natural extension of its mission to offer diverse, cost-effective investment options and tap into a rapidly-growing market.

Private equities have a total value around the US$10 trillion mark, compared to the US$100 trillion in public markets, but the opportunity set is vast. "By number of companies, private assets is actually the larger pool of capital," said Fleiter.

Understanding the options

With greater accessibility, a range of options has emerged for investors looking to tap into private credit markets, but understanding the various distinctions is important.

"The structure really informs the risk that people take and what to expect from your private credit exposure," says Fleiter.

One is a BDC, or business development company, which emerged in the early 2000s and act like closed-end funds. "They trade on an exchange, they're able to use $2 of debt for every dollar equity you put in," said Fleiter. 

"So they're very-levered exposures and they charge very high fees. They're a great exposure if you want to be able to trade daily, but with that comes the problem that they can trade away from NAV."

These shortcomings led to the development of non-traded BDCs, which operated more like funds, with quarterly redemptions, somewhat lower fees and valued at NAV. 

Alongside those are interval funds, which function much like an alternatives version of a US mutual fund and is the structure Betashares decided to invest in for its first private credit exposure. Interval funds cap the amount of leverage that can be used, but are also valued at NAV. 

"The interval fund is probably the most investor-friendly structure," says Fleiter. "This is regulated under the same Investment Company Act of 1940, the same regulation that governs US mutual funds, that caps out what you can use from a leverage standpoint at 0.5 times leverage."

Delivering US exposure

Betashares has partnered with Cliffwater in the US to offer the Betashares Private Capital - Cliffwater Private Credit Fund, which aims to generate income from a diversified portfolio of first lien loans to mostly US companies, along with currency hedging. 

Private asset specialist Cliffwater now has US$40 billion on its interval fund platform across a variety of private equity and private credit exposures. 

The fundamental question for private credit 

The other consideration, says Fleiter, is whether a company is sponsor-backed or non-sponsored. Sponsored companies can be buoyed by the institutional management teams behind the private equity partners. 

"Typically non-sponsored businesses are higher risk because you don't have that ownership support when times get tough," says Fleiter. 

Ultimately, private credit can offer diversification, better risk-adjusted returns and less volatility than other asset classes, but as with anything, there's always certain trade-offs. 

"Everyone's essentially seeking higher risk adjusted returns and enhanced portfolio outcomes," says Fleiter. "[With private credit] you definitely can achieve a higher risk adjusted return, but you do have to be mindful that you're giving up a bit of liquidity."

Earn attractive income from high-quality private credit

Betashares first Private Capital Fund provides exposure to a diversified portfolio of over 3,800 senior secured loans to predominantly US middle-market businesses by investing in a fund managed by leading global private credit manager, Cliffwater LLC. Learn more by visiting the fund profile below or the Betashares website. 

Managed Fund

Betashares Private Capital - Cliffwater Private Credit Fund

Alternative Assets

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