Private Credit & Commodities: Economic Outlook & Future Trends

Redemptions from US private credit funds doubled in the fourth quarter of 2025, with some technology-focused funds experiencing increases exceeding six times the previous period, according to data released Thursday.

The surge in redemption notices centered on non-traded Business Development Companies (BDCs) and US private credit funds, signaling a shift in investor sentiment. Simultaneously, capital inflows into US-focused private credit funds slowed during the first nine months of 2025 compared to the prior year, indicating a cooling in demand.

The changing dynamics reach as the private credit market, which grew from $40 billion in 2000 to approximately $1.7 trillion, potentially faces headwinds. Vanguard noted Thursday that higher geopolitical risk premia are supporting commodities, while private credit has turn into an established component of the below-investment-grade credit markets.

Analysts at Morgan Stanley project the private credit market could reach $5 trillion by 2029, fueled by increased market volatility and evolving bank lending regulations. The appeal of private credit lies, in part, in its ability to offer floating interest rates that adjust with benchmark rates.

However, Gemcorp Capital Advisors Portfolio Manager Ahmad Al-Sati suggests a potential pivot for the asset class, pointing to opportunities beyond the US. “Asset classes mature. They change. They morph. And they pivot. Yet their benefits to a portfolio may not necessarily decrease. Rather, their role and form might evolve,” Al-Sati stated in a report released January 22nd. He highlighted that emerging markets, representing over 50% of global GDP, may present untapped potential, particularly in asset-based lending, short-duration credit, and commodity credit.

Goldman Sachs analysts contend that private credit can serve as a defensive asset for investors navigating increased market volatility and economic disruption. Despite this potential, disciplined credit underwriting remains the most critical factor for success, according to Gemcorp.

Fund investors allocated less capital to US focused private credit funds in the first nine months of 2025 relative to the prior period.