Why Franklin Templeton for private credit investing?
Our experienced teams provide a wide range of investment options in private credit, special situations, structured credit and commercial real estate credit. We bring extensive expertise across various credit markets to help meet your investment needs.
US$83 bn
Private credit assets under management
20+
Years investing in private credit
160+
Dedicated investment professionals
Data as of 30/06/2025.
Potential benefits of private credit investing
Alternative credit has potential to offer a premium yield compared to traditional fixed income sectors
Asset Class Yields (%)
As of 31 March 2025.
Past performance is not necessarily indicative nor a guarantee of future performance.
Sources: Franklin Templeton Capital Markets Insights Group, Bloomberg, ICE BofA, Federal Reserve, FTSE, Cliffwater, Mornigstar, S&P Global, NCREIF. As of 31 March 2025. The indices used are Cliffwater Direct Lending Index for US Private Debt, Morningstar European Leveraged Loan Index for Global Leveraged Loans, ICE BofA Global High Yield Index for Global High Yield, FTSE EPRA Nareit Global REITs Index for Global Public REITs, NCREIF Fund Index - Open End Diversified Core Equity for US Private REITs, Bloomberg Global Aggregate (7–10-Year) Index for Global Bonds, US Benchmark Bond - 10-Year Index for U.S. 10Y Treasury and Bloomberg Global Aggregate Index for Global Aggregate, S&P International Corp Bd TR USD for Global Corporate Bond. This information is provided for illustrative purposes only. Hypothetical portfolio results shown do not represent the performance of an actual investment. The results are rebalanced quarterly and assume reinvestment of ordinary income and distributions. The results do not reflect a deduction of fees, taxes and other expenses, if any, which would reduce performance.
“Cliffwater,” “Cliffwater Direct Lending Index” and “CDLI” are trademarks of Cliffwater LLC. The Cliffwater Direct Lending Indexes (the “Indexes”) and all information on the performance or characteristics thereof (“Index Data”) are owned exclusively by Cliffwater LLC, and are referenced herein under license. Neither Cliffwater nor any of its affiliates sponsor or endorse, or are affiliated with or otherwise connected to, Franklin Templeton Companies LLC, or any of its products or services. All Index Data is provided for informational purposes only, on an “as available” basis, without any warranty of any kind, whether express or implied. Cliffwater and its affiliates do not accept any liability whatsoever for any errors or omissions in the Indexes or Index Data, or arising from any use of the Indexes or Index Data, and no third party may rely on any Indexes or Index Data referenced in this report. No further distribution of Index Data is permitted without the express written consent of Cliffwater. Any reference to or use of the Index or Index Data is subject to the further notices and disclaimers set forth from time to time on Cliffwater’s website at https://www.cliffwaterdirectlendingindex.com/disclosures.
Private credit investment risks: Private credit investments can be similarly impacted by interest rates as publicly offered fixed income securities. Additionally, privately offered credit investments including private debt and loans are suitable only for investors who can bear the risks associated with private market investments (such as private credit and private equity) with potential limited liquidity. Shares will not be listed on a public exchange, and no secondary market is expected to develop. Assessing the value of privately offered credit investments can be hindered by a lack of available information and depend on representations made by the borrower. There can be no assurance that such representations are accurate or complete, and any misrepresentation or omission may adversely affect the value of such investments.
Leveraged loans investment risks: Leveraged loans carry similar risks as private credit investments, but carry a higher degree of risk, since borrowers typically have high levels of debt and/or a low credit rating. Due to the higher risk associated with these loans they typically pay higher interest rates, but also carry a higher risk of default.
Real estate investment risks: Risks of investing in real estate investments include but are not limited to fluctuations in lease occupancy rates and operating expenses, variations in rental schedules, which in turn may be adversely affected by local, state, national or international economic conditions. Such conditions may be impacted by the supply and demand for real estate properties, zoning laws, rent control laws, real property taxes, the availability and costs of financing, and environmental laws. Furthermore, investments in real estate are also impacted by market disruptions caused by regional concerns, political upheaval, sovereign debt crises, and uninsured losses (generally from catastrophic events such as earthquakes, floods and wars). Investments in real estate related securities, such as asset-backed or mortgage-backed securities are subject to prepayment and extension risks.
Private Real Estate Investments Risks: Private real estate bears the same risks as real estate in general, but additionally is suitable only for investors who can bear the risks associated with private market investments (such as private credit and private equity) with potential limited liquidity. Shares will not be listed on a public exchange, and no secondary market is expected to develop.
Fixed income investment risks (including US Government securities): Bond prices generally move in the opposite direction of interest rates. As the prices of bonds in the fund adjust to a rise in interest rates, the fund’s share price may decline. Changes in the financial strength of a bond issuer or in a bond’s credit rating may affect its value. High-yield bonds are subject to greater price volatility, illiquidity and possibility of default.
The appeal of private credit
Private credit can be a valuable addition to your investment portfolio, offering the potential for higher returns, greater diversification and unique opportunities that complement traditional fixed income investments.
Higher income potential
Private credit often offers higher yields compared to traditional fixed income investments, such as bonds. This can lead to greater income generation for your portfolio.
Diversification
Private credit investments are generally less correlated* with public markets, which can help reduce overall portfolio risks (volatility) and improve stability.
Access to unique opportunities
Private credit allows you to invest in opportunities that are not available in public markets, such as loans to small and medium-sized businesses or real estate projects. This can provide additional avenues for growth.
*Correlation is a statistic that measures the degree to which two securities move in relation to each other.
Private credit can offer more features compared to public fixed income
Private credit offers a range of features that cater to investors looking for enhanced customisation, higher yields and more control compared to public fixed income markets.
| Private Credit | Leveraged Loans | High Yield | ||
|---|---|---|---|---|
Enhanced Yields | Attractive yield relative to traditional fixed income | |||
Floating Rate | Natural hedge in a rising rate environment | |||
Senior Secured | Risk/return profile at top of the capital structure | |||
Covenants | Stricter requirements on loan documentation and higher equity cushions (lower loan-to-value) | |||
Privately Negotiated | Directly negotiate fees, covenants and investment terms with borrower |
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Glossary
Private credit/debt:
typically invest in non-listed debt issues, including bonds, notes and loans issued by private companies. Private debt has the potential to provide greater returns, control and reduced liquidity, than public markets.
Alternative credit:
invests in below-investment-grade fixed income sectors that are relatively illiquid. Alternative credit may not be available to investors for direct investment as individuals but can be accessed through professionally managed traditional mutual funds.
Correlation:
is a statistical measure of the relationship between two sets of data. When asset prices move together, they are described as positively correlated; when they move opposite to each other, the correlation is described as negative or inverse. If price movements have no relationship to each other, they are described as uncorrelated.
Unconstrained:
investing is an investment style that does not require a fund or portfolio manager to adhere to a specific benchmark. Unconstrained investing allows managers to pursue returns across many asset classes and sectors.
Diversification:
is a risk management strategy that mixes a wide variety of investments within a portfolio. A diversified portfolio contains a mix of distinct asset types and investment vehicles in an attempt at limiting exposure to any single asset or risk.
Investment risks
Private credit investments including private debt and loans are suitable only for investors who can bear the risks associated with private market investments with potential limited liquidity.
Important information
This document is intended to be of general interest only. This document should not be construed as individual investment advice or offer or solicitation to buy, sell or hold any shares of fund or security. The information provided for any individual security mentioned is not a sufficient basis upon which to make an investment decision. Investment involves risks. Value of investments may go up as well as down and past performance is not an indicator or a guarantee of future performance. The investment returns are calculated on NAV to NAV basis, taking into account of reinvestments and capital gain or loss. The investment returns are denominated in stated currency, which may be a foreign currency other than USD and HKD (“other foreign currency”). US/HK dollar-based investors are therefore exposed to fluctuations in the US/HK dollar / other foreign currency exchange rate. Please refer to the offering documents for further details, including the risk factors.
The data, comments, opinions, estimates and other information contained herein may be subject to change without notice. There is no guarantee that an investment product will meet its objective and any forecasts expressed will be realized. Performance may also be affected by currency fluctuations. Reduced liquidity may have a negative impact on the price of the assets. Currency fluctuations may affect the value of overseas investments. Where an investment product invests in emerging markets, the risks can be greater than in developed markets. Where an investment product invests in derivative instruments, this entails specific risks that may increase the risk profile of the investment product. Where an investment product invests in a specific sector or geographical area, the returns may be more volatile than a more diversified investment product. Franklin Templeton accepts no liability whatsoever for any direct or indirect consequential loss arising from use of this document or any comment, opinion or estimate herein. This document may not be reproduced, distributed or published without prior written permission from Franklin Templeton.
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In addition, a summary of investor rights is available from here. The summary is available in English and Chinese.
The fund(s)/ sub-fund(s) are notified for marketing in various regions under the AIFMD Directive. The fund(s)/ sub-fund(s) can terminate such notifications for any share class and/or sub-fund at any time by using the process contained in Article 32a of the AIFMD Directive.
For the avoidance of doubt, if you make a decision to invest, you will be buying units/shares in the fund(s)/ sub-fund(s) and will not be investing directly in the underlying assets of the fund(s)/ sub-fund(s).
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