2025 witnessed a more robust private credit market compared to the previous year.
The private credit market is expected to remain a reliable alternative amid tight lending conditions and high interest rates, according to the third annual Barnes & Thornburg 2025 Investment Funds Outlook Report. The report, which surveyed U.S.-based limited partners (LPs), general partners (GPs), and service providers, predicts that the key sectors to thrive in the 2025 investment market are hedge funds, private credit, and cryptocurrency.
Many GPs came into the year optimistic about expected fundraising, but for many managers, that optimism has been tempered due to market volatility and economic uncertainty. However, the report indicates that 80% of the surveyed parties expect a stronger market for private credit in 2025 compared to the prior year.
Hedge funds are expected to perform well given their ability to benefit from volatility and flexible investment mandates. The private credit market is anticipated to continue strong growth, particularly as traditional banks pull back from lending—a trend allowing private credit to fill the financing gap. Cryptocurrency investments are also forecasted to gain momentum as investor interest remains high.
Roughly 75% of respondents were positive about hedge fund performance, 80% anticipated strength in private credit, and 84% believed cryptocurrencies would advance further in 2025. Additionally, regulatory developments may expand access to private credit, potentially increasing retail investor participation alongside institutional investors.
In the realm of private credit, among respondents who are not private credit professionals, 63% have a private credit strategy in place, up from 37% in 2024. However, 23% of the non-private credit professionals are currently implementing a private credit strategy, compared to 39% a year ago. This suggests a shift in the market, with more professionals considering private credit as a viable investment option.
The Barnes & Thornburg report also indicates a pattern of consolidation in the private credit sector, with the top 50 private credit-focused firms raising 91% of the capital in 2024. This consolidation could potentially lead to increased competition and potentially higher returns for investors.
Despite the optimism, GP concerns about fundraising and returns have significantly increased since the 2024 survey. Only 4% are not considering a private credit strategy, down from 7% last year. This shows a growing interest in private credit, even as GPs grapple with the challenges of fundraising in a volatile market.
In conclusion, the Barnes & Thornburg 2025 Investment Funds Outlook Report suggests that hedge funds, private credit, and cryptocurrency are the primary sectors investment professionals believe will thrive in 2025. Despite the challenges faced by GPs and the volatile market, these sectors continue to attract strong interest and optimism from investment professionals.
[1] Barnes & Thornburg 2025 Investment Funds Outlook Report [2] Private Credit Market Anticipated to Remain Strong in 2025 [3] Cryptocurrency Investments Forecasted to Gain Momentum in 2025 [4] Hedge Funds Expected to Perform Well in 2025 [5] Regulatory Developments May Expand Access to Private Credit in 2025
- In the upcoming year, 80% of surveyed parties expect a stronger market for private credit, indicating that the private credit market is anticipated to remain strong in 2025.
- The optimism towards private credit investment continues to grow, as only 4% are not considering a private credit strategy, down from 7% last year, showing a rising interest in this sector, despite the challenges faced by General Partners (GPs) in a volatile market.
