Why We Think Private Credit Belongs in a Diversified Portfolio
Most portfolios are still built around a core of public stocks and bonds, often summed up as a "60/40" split. That approach has held up well over long stretches of market history. But it also means a portfolio's fortunes are tied closely to two markets moving through the same broad economic conditions at the same time. When public equity and bond markets both react to the same interest rate news, the same inflation print, or the same recession fear, a portfolio built entirely from those two ingredients doesn't have much room to move independently.
We see private credit as one of the categories investors turn to when they want exposure that doesn't move in lockstep with public equities and bonds. Part of that comes down to what actually drives the return. A stock's price reflects earnings expectations and market sentiment that can shift by the hour. A bond's price moves with interest rate expectations. A fixed-rate promissory note like ours is different in kind: the return is tied to a contracted rate, not to daily trading sentiment in public markets. That doesn't make it a better or safer holding. It makes it a different kind of holding.
There's also a structural piece to this. Instruments like our promissory notes aren't marked to market every day and aren't driven by the same trading flows as listed securities, so their valuation isn't subject to the kind of day-to-day repricing that can make public portfolios feel volatile even when nothing has fundamentally changed. For some investors, that steadiness is part of the appeal. It's worth being clear, though, that this isn't the same as liquidity. A note that isn't priced daily also generally isn't something you can sell on short notice, which is a real tradeoff, not a hidden benefit.
That said, "different" doesn't mean "risk-free." Private credit comes with its own risks, including credit risk, illiquidity, and whatever specific risks apply to the asset backing the note. In our case, that means understanding the dynamics of restructured private student loans specifically, not private credit in the abstract.
For investors who already have a solid stock-and-bond core, we often hear that adding a modest allocation to private credit is a way to diversify where a portfolio's returns are actually coming from, not just how many holdings it has. The thinking isn't that private credit replaces a stock-and-bond foundation. It's that a source of return with a different set of drivers can complement one, rather than duplicate it. How much to allocate, and whether a structure like ours is the right fit at all, depends entirely on an individual investor's goals, time horizon, and risk tolerance, which we think is a conversation better had with a financial advisor than answered with a one-size-fits-all number.
Disclosures
Yrefy refinances distressed or defaulted private student loans. This blog is not an offer and does not disclose the material risks of the notes. Promissory note offers available only through the Private Placement Memorandum to accredited investors. The notes are illiquid, speculative, and involve risk of loss. Not FDIC or SIPC insured. Returns depend on the issuer’s financial condition and are not guaranteed. Securities offered through Nobles & Richards, Inc., member FINRA. Yrefy is not affiliated with Nobles & Richards, Inc.
