By Greg Friedman, managing principal and chief executive officer, Peachtree Group
Since January, volatility in Washington has added new layers of complexity to the investment landscape. Once buoyed by resilient consumer spending and AI-driven optimism, equity markets have stumbled as investors weighed the risk of disrupted supply chains, higher costs, and slower global growth.
Yet amid this turbulence, bonds have quietly returned to form, resuming their traditional role as portfolio ballast. U.S. Treasurys and high-grade corporates have attracted meaningful inflows amid signs of a cooling labor market and slowing economy, which had reignited rate cut expectations.
However, recent volatility in longer-term yields – despite expectations for the Federal Reserve to cut rates by up to 100 basis points this year – underscores the importance of active duration management. In this environment, with a backdrop of geopolitical tensions and unpredictable trade dynamics, traditional bonds alone may not offer sufficient protection or return.
Private credit – especially strategies focused on senior secured lending, real estate credit or asset-backed deals – is proving to be a powerful complement to traditional fixed income. These investments typically deliver high, consistent cash flow, often in the 8% to 12% range, allowing portfolios to generate meaningful income while materially shortening duration.
Duration, a time-based measure of interest rate sensitivity, is especially critical in today’s market. With a volatile yield curve and diverging views on short- versus long-term rates, investors need to be mindful of how duration can amplify portfolio risk. Longer-duration assets, in particular, are more vulnerable to value swings as interest rates shift.
Private credit is often structured with floating rates and/or shorter maturities, helping reduce interest rate exposure. Investors also benefit from consistent high cash flows and direct exposure to real assets, while avoiding much of the mark-to-market volatility typical of publicly traded securities, especially in closed-end vehicles that are insulated from redemption-driven risk. Importantly, the high cash flow does more than generate income. It also accelerates the return of capital and reduces duration risk, helping to dampen overall portfolio volatility.
This is especially important for investors navigating late-cycle dynamics. Private credit’s structural protections and active underwriting provide a buffer when public markets become dislocated. And with $7 trillion still sitting in money market funds as of April, much of that capital may reenter fixed income, private credit included, once the administration’s policy path becomes clearer.
Strategies That Stand Out in This Evolving Landscape
Lean into private credit and CRE lending: Today’s opportunity in commercial real estate lending is not just cyclical; it is structural. With regional banks still constrained, real estate borrowers – especially those facing near term maturities – are increasingly turning to well-capitalized private credit lenders. CRE debt backed by transitional or undercapitalized assets offers the potential for high yields, strong collateral protection, and income driven portfolio resilience. Floating rate structures further help mitigate interest rate risk.
Manage duration with purpose: Extend selectively in high-quality public bonds where appropriate, but pair with private loans that naturally shorten duration and offer built-in inflation protection.
Prioritize credit quality: Focus on fundamentals in both public and private markets. Strong sponsors, well-underwritten assets, and cash-flowing real estate remain critical differentiators.
Balance rate and credit risk dynamically: A flexible allocation between interest-rate-sensitive assets and higher-yielding private credit allows investors to navigate changing conditions without overexposing to any single risk.
Looking Forward
Markets are signaling a shift. The “higher for longer” rate environment may persist, but central banks are recalibrating. With growth slowing and inflation potentially stickier than expected, fixed income is again becoming a foundational element of portfolio strategy.
But in this chapter, it’s not just about owning bonds. It’s about owning the right mix of bonds and recognizing the growing role of private credit in delivering what investors need most: income, stability, and resilience.
As traditional tools are tested, private credit offers a modern edge.
Since co-founding Peachtree Group in 2007, Greg Friedman has successfully overseen investments exceeding $11.0 billion in commercial real estate and various other enterprises. With over 25 years of experience, he brings extensive experience in credit and equity investing, particularly in hotels and other commercial real estate assets. Previously, Friedman served as senior vice president of business development for Specialty Finance Group, where he originated more than $2 billion of credit transactions. Before that, he was vice president of business development for GMAC Commercial Mortgage Asset-Backed Lending Division. During his six-year tenure, he originated, closed and funded more than 300 hospitality FF&E financing transactions with an aggregate capital structure exceeding $10 billion. Friedman is a graduate of the University of Texas at Austin.
The views and opinions expressed in the preceding article are those of the author and do not necessarily reflect the views of AltsWire.
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