Private Credit vs Fixed Income: What HNIs need to know before investing

Private credit is becoming a more familiar part of the wealth conversation as HNIs look beyond traditional fixed-income products for income and diversification. The attraction is understandable, but so is the caution, especially when markets are being pulled in several directions.

The growing interest in private credit comes at a time when HNIs are reassessing portfolio construction amid shifting equity valuations, foreign fund flows and interest-rate expectations. But the prospect of higher returns makes risk assessment critical, particularly when it comes to the borrower, deal structure and downside protection.

So, how should HNIs approach private credit as an investment avenue? The question will be at the centre of discussion at the ET Alpha Wealth Summit 2.0 on October 8, where a panel on Structured Debt will examine the evolving role of private credit in sophisticated portfolios.


The panel will feature Vikas Satija, Managing Director and CEO, Shriram Wealth; B Gopkumar, Managing Director and CEO, Axis Mutual Fund; Ashish Mehrotra, Managing Director and CEO, Northern Arc Capital; and Shantanu Sahai, CEO, ASK Private Credit.

What is private credit?

Private credit involves lending directly to companies or borrowers through non-bank lenders and private credit funds, rather than through traditional bank loans or publicly traded bonds.

The segment includes senior secured loans, structured debt and other privately negotiated arrangements. Its attraction for HNIs lies in the potential for higher income, with terms tailored around the borrower's credit profile, collateral, tenure and repayment structure.

Private credit vs bonds, deposits and debt funds

The comparison with traditional fixed income goes beyond headline yields.

Deposits offer simplicity and liquidity, while high-quality bonds provide greater transparency and price discovery. Debt funds offer diversified exposure and professional management.

Private credit can offer higher yields, but investors typically take on greater borrower-specific risk, lower liquidity and more complex structures. The key question is whether the incremental return adequately compensates for those risks.

How to assess the risks

Borrower quality remains the starting point. Investors need to assess cash flows, leverage, repayment capacity and access to other funding.

The structure matters just as much. Seniority, collateral, covenants and repayment terms can determine the level of protection if a borrower comes under stress. A senior secured loan can have a very different risk profile from subordinated or unsecured debt, even at similar yields.

Investors should also examine tenure, liquidity and default risk.

Where can private credit fit?

Private credit is best viewed as a complement to traditional fixed income rather than a replacement. For HNIs able to accept lower liquidity and greater complexity, it can potentially add income and diversification.

But allocation should depend on the investor's risk tolerance, liquidity needs, investment horizon and existing credit exposure. The highest yield is not necessarily the best opportunity.

Ultimately, the focus should be on risk-adjusted returns: whether the borrower quality, structure, liquidity profile and downside protection justify the yield on offer.

Join the conversation at ET Alpha Wealth Summit 2.0 on 8 October 2026 in Mumbai. Register Now.