You can invest in private credit through non-traded BDCs with minimums as low as $2,500, listed BDCs on the stock exchange, interval funds, the first private-credit ETFs, or direct commitments to closed-end funds if you are a wealthy accredited investor. Each route trades yield against liquidity and fees differently, so the right one depends on how much cash you can lock away.
The $2.1 trillion market behind the pitch
Private credit is one of those phrases that drifted from institutional boardrooms into retail brochures very quickly. The International Monetary Fund put the global market at $2.1 trillion in assets and committed capital in its April 2024 Global Financial Stability Report, roughly three-quarters of it in the United States. In plain terms: companies too small to issue public bonds, and too risky for traditional bank lending, now borrow directly from funds instead of banks.
For investors, the draw is straightforward. Private loans usually pay floating rates, so when interest rates rose after 2022, private credit holders kept collecting higher coupons while bond prices fell. Fund managers like to talk about that. What they mention less eagerly is that your money gets locked up, the fees run high, and the valuations you see each quarter come from models, not markets. The IMF itself warned that private credit valuations can look “stale” because loans rarely trade.
That tension, decent yield versus genuine constraints, is the whole story. Once you accept it, the practical question becomes: which door into the market actually fits an ordinary investor? There are five.
5 ways to invest in private credit, compared
Route 1: Non-traded BDCs, the most popular retail door
A business development company (BDC) is a US fund structure that lends to mid-sized companies. The listed ones trade on stock exchanges like ordinary shares. The non-traded versions, such as Blackstone’s BCRED or Apollo Debt Solutions, do not. You subscribe monthly at net asset value, and when you want out, the fund itself buys back your shares, usually quarterly, with repurchases capped at about 5% of outstanding shares each quarter.
This is the structure Wall Street has pushed hardest at individuals. Minimum investments start around $2,500 for the retail share classes, and eligibility is often limited to accredited investors. The standard fee load is a 1.25% annual management fee plus a 12.5% cut of profits above a 5% hurdle. That fee drag matters more than most brochures admit: every percentage point of fees is yield you keep only if the loans perform.
The liquidity cap is the part to read twice. In 2026 Apollo’s $26 billion Debt Solutions BDC held redemptions to the 5% quarterly limit after requests exceeded it, meaning investors who asked to leave received only part of what they requested. The gate exists to protect remaining investors from forced loan sales. It also means your “semi-liquid” investment can keep you waiting for several quarters when everyone heads for the door at once.
Route 2: Listed BDCs, for the impatient
Listed BDCs like Ares Capital hold the same kind of loans but trade daily on the stock market. You can buy them through any brokerage account, no accredited status required, and sell whenever the market is open. Yields are often quoted in the high single digits.
The price you pay for daily liquidity is volatility. Because these vehicles are exchange-traded, their share prices swing with market sentiment even when the underlying loans are paying on schedule, and they can trade at persistent discounts to their net asset value. If the appeal of private credit is avoiding the daily noise of public markets, a listed BDC reintroduces that noise through the back door.
Route 3: Interval funds
Interval funds are mutual-fund-like vehicles that hold private loans and offer to repurchase a set slice of shares, typically 5 to 25% of those outstanding, at regular intervals. Minimums are often moderate, sometimes $25,000 or less, and the structure sits somewhere between a non-traded BDC and a traditional fund.
The honest comparison with route 1 is that you are buying similar loans with similar fee drag and similar liquidity limits, just packaged under a different legal wrapper. Compare the expense ratio and the repurchase terms directly before assuming one is cheaper than the other.
Route 4: Private-credit ETFs, the newest door
In early 2025 State Street and Apollo launched the first ETF offering exposure to private credit alongside public credit, opening the asset class to anyone with a brokerage account and no minimum beyond the share price. The idea is appealing: private-credit-like income with ETF trading hours.
Treat the novelty with proportionate scepticism. An ETF can only trade its underlying loans if someone will buy them, and genuinely private loans have no deep secondary market. Early products lean heavily on public and semi-liquid credit to square that circle. Read the holdings list, not the marketing name, before deciding how much “private” exposure you are really getting.
Route 5: Direct fund commitments, the original door
This is how institutions do it: commit capital to a closed-end private credit fund run by a manager like Ares, KKR or Blue Owl, have it called over several years as deals close, and receive distributions as loans repay. Minimums typically start in the hundreds of thousands of dollars, investors must be accredited, and the capital is locked up for seven to ten years.
For most readers this door is decorative, but it matters for one reason: it is the reference point against which every retail wrapper should be judged. If a non-traded BDC charges you meaningfully more than an institutional fund for the same loans, you should at least know you are paying a convenience premium. Some investors reach this tier through feeder funds that pool smaller commitments, though those add another layer of fees.
| Route | Typical minimum | Liquidity | Fee drag | Who it suits |
|---|---|---|---|---|
| Non-traded BDC | ~$2,500 | Quarterly buybacks, capped ~5% | ~1.25% + 12.5% of profits | Accredited investors who can wait |
| Listed BDC | One share | Daily, at market price | Manager fees, lower headline drag | Anyone wanting yield with an exit |
| Interval fund | ~$5,000-25,000 | Periodic repurchase offers | Often 2-3% all-in | Income seekers with patience |
| Private-credit ETF | One share | Daily, at market price | Low, but exposure is blended | Curious investors testing the waters |
| Direct fund commitment | $250,000+ | Locked 7-10 years | ~1.5-2% + 15-20% of profits | Wealthy accredited investors |
What to check before you invest in private credit
Fees against net returns, not gross. A fund advertising a 9% gross yield and charging 1.25% plus a performance cut may net you closer to 7%. Ask for net-of-fee track records over a full cycle, not marketing illustrations.
Default rates, in context. The IMF put current private-credit default rates at roughly 2 to 3%, with the warning that a downturn could push them toward 4 to 6%. That is normal for the asset class, not a scandal, but your expected return should be net of those losses, not gross of them.
What the loans actually are. Some private credit is plain senior secured lending to profitable companies. Some involves riskier structures, including payment-in-kind (PIK) interest where borrowers pay interest with more debt rather than cash. Our PIK interest explainer shows how that trade can quietly increase leverage. If you cannot tell which kind you own, you do not understand the product.
Your own time horizon. The classic mistake is buying a semi-liquid fund with money you might need in two years, then discovering the queue at the exit. Match the lock-up to money you genuinely will not touch. How this market reached its current size, and why it kept growing after rates rose, is covered in our piece on how private credit became Wall Street’s fastest-growing asset class, while the rate-sensitivity question is unpacked in our analysis of private credit after higher interest rates.
Private credit sits inside the broader world of alternative finance, where our AltFi guide maps the main non-bank funding routes for context.
FAQ
Do you need to be an accredited investor to invest in private credit?
For non-traded BDCs and direct fund commitments, usually yes: in the US that means $200,000 of annual income ($300,000 jointly) or $1 million in net worth excluding your home. Listed BDCs and private-credit ETFs have no such requirement, which is exactly why they exist.
How liquid is private credit really?
Less liquid than the brochure implies. Non-traded BDCs typically offer quarterly buybacks capped at 5% of shares, and gates can stretch exits across several quarters, as Apollo investors discovered in 2026. Only listed vehicles offer genuine daily liquidity, and their prices move with the market.
What returns can you realistically expect?
Diversified direct-lending funds have historically delivered net returns in the high single digits over a full cycle, comfortably above investment-grade bonds, with lower reported volatility. The volatility is partly an accounting effect: loans are marked quarterly by models rather than daily by markets.
What is the biggest risk retail investors miss?
Valuation opacity. Because the loans rarely trade, the price you see is an estimate, and the IMF’s own comparison found private credit takes smaller markdowns in stress periods than comparable traded loans, despite lower credit quality. Smooth reported returns are not the same as low risk.
Can you lose everything?
In a diversified fund of senior secured loans, a total loss is extremely unlikely: senior lenders are first in line when borrowers fail. Individual loans can and do default, which is why the 2 to 3% default rate should be priced into your expectations rather than treated as a surprise.
Educational content only, not financial advice. Private credit involves credit, liquidity and valuation risk; consider professional advice before investing.
Sources
- International Monetary Fund, “Fast-Growing $2 Trillion Private Credit Market Warrants Closer Watch”, Global Financial Stability Report blog, April 2024. imf.org
- IMF Spring Meetings 2026 press briefing transcript: direct-lending universe of about $2 trillion, semiliquid portion about $300 billion, current default rates 2 to 3%. imf.org
- InvestingLive, “How private credit fund redemption gates work, and why Apollo investors still wait”, 2026. investinglive.com
Kaleem Afzal Khan is a finance and investment writer specializing in alternative investments, wealth-building strategies, global economic trends, and emerging financial opportunities. His work focuses on helping readers understand complex financial concepts through clear, research-driven analysis and practical insights.
With a strong background in engineering, project management, and analytical problem-solving, Kaleem brings a data-oriented perspective to investment research, market developments, and long-term wealth creation. He regularly explores topics including private markets, infrastructure investments, cryptocurrency trends, personal finance, and macroeconomic developments that shape the future of capital allocation.
Through his writing, Kaleem aims to bridge the gap between institutional-level financial knowledge and everyday investors, empowering readers to make informed financial decisions in an increasingly complex economic landscape.
