One asset class, many strategies: a selection framework for private debt

Jun 15, 2026
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Chris Martin

Private debt is an increasingly established part of strategic asset allocations, but there is more to this than private credit.

Key takeaways:

  • Private debt is not a single strategy: it spans a plethora of sub-strategies from private credit to real asset debt, asset-backed finance, and beyond. Each has distinct risk and return characteristics, but many investors access only a subset of the wider opportunity set.
  • Returns in private debt are built differently by strategy: understanding that decomposition changes how to size, position and stress-test each allocation.
  • Strategy selection requires a framework, not a shortlist: we propose five diagnostic questions that offer investors a structured basis for assessing which private debt strategies could belong in their portfolio. 


Most institutional investors who hold private debt are, in practice, holding private credit, more specifically senior secured loans to mid-market corporates. That exposure has served them well. But it represents one corner of a much broader opportunity set, and for many portfolios it is now the entirety of their private debt allocation, perhaps by default rather than by design.

Private debt encompasses a spectrum that runs from infrastructure and real estate loans to asset-backed finance (for example secured against royalties or aircraft cash flows), through to opportunistic and distressed credit strategies. These sub-strategies differ not just in the borrowers they serve, but in their risk and return profiles, their sensitivity to rates and economic cycles, and the portfolio objectives they can realistically address.

A pension fund seeking long-duration income, an insurer managing Solvency II capital efficiency, and an endowment targeting return enhancement each have a different answer to the question of which private debt strategies belong in their portfolio.

In this paper we make the case for allocating to it more deliberately, mapping the range of private debt strategies, explaining what drives returns, and proposing a practical framework for assessing which strategies belong in which portfolios. The aim is not to make the case for private debt, but to help investors navigate the wide range of sub-strategies more purposefully.

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