Robert Armstrong

your high-yield bond part of your portfolio and institution.

Maybe the private credit guy offers you 10, let's say.

I'm just kind of picking those up.

But you get a little edge there.

And that is called reaping an illiquidity premium.

In the bond market, you can trade in and out all the time.

You go to private credit.

In theory, you get a couple more percentage points of yield, but you're locked into this fund for five years.

And everybody likes this.

Extra yield, everybody loves it.

That's for the borrowers.

For the borrowers.

Borrowers like it because they don't want to.

There's another very important point, which is going to come up in this conversation, which I think I should mention.

Which is that the value of the funds that have these private loans in them are not marked to market every day.

Yes.

Right?

They're marked every quarter or so or however, but very infrequently.

And one of the things institutional investors love about this is that just because of the way the math works—

This means that the returns from private credit look uncorrelated to public markets.