Traci Alloway

And this is in a structure that's typically got a term and it's locked up money that they will not be providing liquidity for those institutional investors.

The problem, and this is where we've run into the big problems, and this is what is really circulating in and around the media, is more recently when we've gone and taken this out into these private BDC structures to market them to

the retail or private wealth world, in order to raise the money, they've needed to offer some concessions on the liquidity, right?

Because it makes it easier to raise money if you're going to allow people or you tell them that you're going to allow them to redeem at least somewhat periodically.

That has allowed them to raise money really fast.

It's a little bit piggy because they've just said, okay, we can raise a lot of money.

Let's just raise the money when we can.

Difference is when those dollars come in, they come into the fund on a subscription basis and need to be invested quickly.

And that's what's really created a lot of the problems and what's really led to the degradation of credit underwriting.

Because if you don't invest those dollars quickly, it creates the lag on performance in the fund.

The minute that dollar comes in, it's part of your NAV.

Therefore, it needs to be invested rapidly in an income earning investment.

So that's what's happened.

And you really saw a huge proliferation of this.

I mean, the most obvious and visible of these you could see on there would be the Cliffwater Corporate Lending Fund, which is CCLFX on your Bloomberg.

If you look that up, you can look at the asset growth in that.

And it really has taken off in the last five years.

In 2022, we would speak to our wealth management advisors who are investors in our fund and ask them about what's working for them.

Because in 2022, rates are going up.

Investment grade bond funds are trading off sharply because people didn't understand the duration risk that they were carrying.