One door to private credit: how multi-manager strategies simplify a complex asset class

Private credit has grown rapidly from a niche institutional strategy into a mainstream component of diversified portfolios. Yet as the asset class expands, it has also become significantly more complex. Strategies now range from direct lending and real estate debt to asset-backed finance and specialty credit, each with different risk profiles and return characteristics. For advisers and wealth investors, navigating this expanding opportunity set has become an increasingly demanding task.

For Ciaran McAssey, executive director of managed investment portfolios at KeyInvest, simplifying access to private credit was a key motivation behind developing a multi-manager solution in partnership with asset consultant Atchison. The goal was to create a structure that provides exposure to the asset class while reducing the operational complexity advisers face when selecting and monitoring individual managers.

“Private credit has become this umbrella term that covers a lot of different strategies outside public markets,” McAssey says.

Bringing institutional asset classes to a broader market

KeyInvest’s starting point was the needs of its own investor base. The firm serves a large number of policyholders who are approaching or already in retirement. For these investors, the priority is not necessarily capital growth but stable income streams and capital preservation over long time horizons.

McAssey believes private credit strategies can play an important role in meeting those objectives, particularly when structured carefully within diversified portfolios.

“Clients still want yield and they want access to asset classes that can provide it,” he explains.

However, building direct exposure to multiple private credit funds can create significant administrative and governance burdens for advisers. Each allocation requires due diligence, monitoring and periodic portfolio adjustments when managers change or strategies evolve. McAssey argues that a multi-manager approach can remove much of that operational friction by providing a single access point into the asset class.

“What we’re trying to create is one entry point into a broad asset class that is growing but also becoming more complex,” he says.

Governance and simplicity

The structure also introduces a governance layer designed to handle manager selection and replacement internally. If an underlying manager underperforms or changes strategy, the portfolio can adjust without requiring advisers to restructure client portfolios or prepare new advice documentation.

McAssey says this design allows advisers to focus more on client outcomes rather than the mechanics of manager selection. Centralising governance also reduces the operational burden associated with monitoring multiple private credit managers.

By consolidating these functions within a single investment vehicle, the structure aims to simplify how advisers access private markets while maintaining institutional standards of oversight.

Institutional research under the hood

Central to the strategy is the partnership with Atchison, which provides the investment research and portfolio construction framework underpinning the fund. Nick Hatzis, investment analyst at Atchison, says the firm’s role is to apply institutional-grade due diligence to the private credit universe and identify managers with strong track records and disciplined underwriting processes.

“Our role is to provide institutional-level research and reporting and identify the best managers across the private credit landscape,” Hatzis says.

The selection process combines quantitative analysis with detailed qualitative assessment. On the quantitative side, Atchison examines historical performance data and prioritises managers with long operating histories. In practice, that often means focusing on firms that have operated for more than a decade and have demonstrated an ability to protect investor capital across different market environments.

Qualitative analysis then focuses on factors such as team stability, underwriting discipline and risk management frameworks. Hatzis says understanding how managers behave during periods of market stress is particularly important when evaluating credit strategies.

“We want to understand how managers have handled default scenarios and how they’ve protected investor capital over time,” he explains.

Focusing on quality

Within the private credit universe, Atchison has identified several characteristics that tend to define higher-quality strategies. One of the most important is the position within the capital structure. Senior secured lending typically offers stronger protection for investors compared with subordinated or mezzanine exposures, particularly when collateral values fluctuate.

“We tend to focus on senior secured first-mortgage lending where the protection for investors is strongest,” Hatzis says.

Loan-to-value ratios are another key consideration. Strategies operating with LVRs around 60 per cent to 65 per cent generally provide a stronger margin of safety if asset values decline. The research process also examines valuation practices and collateral quality to ensure risks remain diversified across the portfolio.

By combining several carefully selected managers, the strategy ultimately creates a diversified credit portfolio spanning hundreds of underlying loans. In this case, the multi-manager approach provides exposure to more than 300 individual loans across the selected strategies, reducing the impact of any single borrower or asset.

A defensive role within portfolios

For portfolio construction, Hatzis believes private credit can play an important defensive role within diversified portfolios. Traditional fixed income allocations have become more challenging in recent years, particularly as correlations between equities and listed bonds have increased during periods of market stress. At the same time, rising inflation has reduced the attractiveness of holding large cash allocations.

“Private credit can provide yield without the duration risk that many traditional bond portfolios carry,” Hatzis says.

Another structural advantage is the reduced mark-to-market volatility associated with private assets. Because private credit investments are not traded daily on public markets, their valuations tend to be less sensitive to short-term market movements. While this does not eliminate risk, it can create smoother return profiles within diversified portfolios.

However, Hatzis emphasises that private credit is not suitable for all investors. The asset class typically requires accepting lower liquidity and less-frequent portfolio reporting compared with listed securities.

Simplifying access as the market evolves

For McAssey, the broader aim of the strategy is to balance access with governance as the private credit market continues to expand. As more managers enter the sector and product offerings multiply, advisers are likely to face increasing complexity when evaluating opportunities.

Providing a structured entry point, he argues, can help address that challenge while still delivering exposure to the underlying income opportunities private credit offers.

“If we can provide a solution with strong governance and manager oversight, advisers can spend more time with their clients instead of managing multiple products,” McAssey says.

As private credit continues its rapid growth, that combination of simplified access and institutional discipline may become increasingly valuable for advisers building income-focused portfolios.

Laurence Parker-Brown

Laurence Parker-Brown is head of content at The Inside Network and managing editor of The Inside Adviser and Investor Strategy News.