Private debt is poised for high-single-digit to low-double-digit returns in 2024 and 2025, despite rising default rates and challenges in the lower middle market. Investors are advised to focus on senior upper-middle-market loans and top-tier managers experienced in stress environments, as current yields for private loans stand at around 11%, outperforming US leveraged loans and high yield. The asset class offers a long-term income source and diversification benefits, though investors must remain aware of inherent risks such as illiquidity and over-concentration.
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