From Yahoo Finance: 2025-05-07 19:55:00

Moody’s warns of retail investors in private credit assets posing a risk to the U.S. economy, with over $2 trillion in assets managed by private credit firms since 2014. Market volatility persists amid Trump’s tariffs on China.

Retail exposure to private credit has accelerated post-pandemic, with a rise in evergreen funds and ETFs. Moody’s emphasizes the need for safeguards to prevent risks like a run on a bank. Flexibility in retail-focused funds could impact trust in fund sponsors if not managed properly.

Loose covenants in evergreen funds pose risks compared to closed-end funds, according to Moody’s. Retail capital has the potential to expand private markets, but maintaining liquidity and transparency will be crucial for long-term success.

Read more: Moody’s warns of risk posed by rising retail exposure to private credit