An Introduction to Private Debt

Doug Stokes sat down for a conversation with Steve Nesbitt, CEO of Cliffwater, LLC. Cliffwater is an institutional advisor, research organization, and asset manager with over $80 billion in assets under advisement. Steve is a pioneer in private debt (also called “direct lending”) and is considered one of the industry’s thought leaders. Steve created the benchmark index that tracks the performance of all private loans and wrote the book on private debt (titled Private Debt).

Cliffwater is also the manager of the Cliffwater Corporate Direct Lending Fund, and our firm has made a large investment on several clients’ behalf.

We are using Cliffwater’s fund as a complement to many clients’ publicly traded fixed income allocation due to (1) substantially higher current yield (Cliffwater’s fund currently yields over 7%), (2) low interest rate sensitivity, and (3) low historic volatility.

Since inception, Cliffwater’s fund has produced an annualized return of 8.35% with a maximum drawdown of -2.15% during March 2020. See fund factsheet and disclosures here.

Please note, since the underlying loans are private and non-traded, the fund is generally illiquid (there is quarterly liquidity up to 5% of net asset value). If you have a substantial near term liquidity need or would like to discuss the fund more specifically, please contact our office.

Please enjoy the conversation between Doug and Steve.

Please note this presentation is for informational purposes only and should not be taken as personal tax or investment advice. Investing in the strategies mentioned carries risk of loss, and investment results are not guaranteed.

Indices are unmanaged and investors cannot invest directly in an index. Unless otherwise noted, performance of indices do not account for any fees, commissions or other expenses that would be incurred.  Returns do not include reinvested dividends. 

The Cliffwater Direct Lending Index is an unmanaged group of securities considered to be representative of the private debt market in general.

Cliffwater Direct Lending Fund has the ability to use leverage of up to 1.5x fund assets. The use of leverage may increase volatility and fund risks.

Please see the webpage at the link below to see the risks, the standardized performance and the fund’s holdings: 

https://www.cliffwaterfunds.com/