The Hidden Flaw In Private Credit (And Our 8.8% Dividend Bargain)

There are three stories moving markets right now:

1. The Iran War.
2. The AI revolution, as heavy investments in the tech cause both excitement and worry, particularly around how AI affects software companies.
3. The private-credit market. Because many software companies relied on credit from private, non-bank lenders, the world of private credit (which went from about $500 billion a decade ago to about $3 trillion today) is wobbling.

All three are combining to put pressure on private-credit funds. That, of course, is a headache for private-credit investors.

Situations like this are exactly why we prefer closed-end funds (CEFs) for generating high, predictable and often monthly paid dividends. In a moment, we’ll talk about one that gives us liquidity, a high dividend and lets us participate in the growth of private firms, too.

This post originally appeared at Contrarian Outlook.