RT Sei (@SeiNetwork)Private credit is the leading RWA sector, representing over 50% of all tokenized value.This market, from corporate loans to HELOCs, has taken off because it’s largely uncorrelated to public markets and offers attractive premiums — now made liquid and composable through tokenization.Private credit demonstrates how tokenization transforms finance — and why every asset class will inevitably move onchain. That trajectory demands performant, institutional-grade rails like Sei.Everything Moves ...

Group 1 - Althera42 is a new fund launched by former BlackRock executive Caspar Macqueen and Christian Czernich, focusing on providing working capital to companies in Europe's digital infrastructure without taking equity stakes [2][5] - The fund aims to raise $300 million and plans to execute between 15 and 20 deals primarily in Europe and the UK, with potential North American investments [6] - Althera42's investment strategy involves exchanging upfront capital for a fixed percentage of future revenues over several years, allowing companies to access capital without diluting equity or incurring rigid debt obligations [3][4] Group 2 - The fund targets late-stage private companies with annual revenues between €10 million and €100 million (approximately $17 million to $117 million), focusing on those with recurring or licensing-based revenue models [7] - Althera42's royalty investment model combines the upside of venture capital with the steady cash flow of private debt, with gains distributed to investors quarterly [4] - The fund charges a 2% management fee and a 20% performance fee [4]

Private credit is the leading RWA sector, representing over 50% of all tokenized value.This market, from corporate loans to HELOCs, has taken off because it’s largely uncorrelated to public markets and offers attractive premiums — now made liquid and composable through tokenization.Private credit demonstrates how tokenization transforms finance — and why every asset class will inevitably move onchain. That trajectory demands performant, institutional-grade rails like Sei.Everything Moves Faster on Sei. ($/a ...

Core Insights - WisdomTree has launched a new tokenized fund focused on private credit, named the WisdomTree Private Credit and Alternative Income Digital Fund (CRDT), which tracks a basket of 35 publicly traded closed-end funds, business development companies, and real estate investment trusts [1][2] - The fund requires a minimum investment of $25 and offers a two-day redemption period, expanding access to a broader range of investors [2][3] - The private credit market has seen significant growth as investors seek yield-focused investment options outside traditional banking [2] Company Developments - Will Peck, head of digital assets at WisdomTree, emphasized that the new fund aims to bring the asset class to a wider universe of investors [3] - WisdomTree has previously launched various tokenized investment vehicles, including those related to money market funds, fixed income securities, and equities [3] Industry Trends - The launch of the CRDT fund aligns with a growing trend among major asset managers on Wall Street, such as BlackRock and Fidelity, who are also exploring tokenized investment products [4] - BlackRock manages a $2 billion tokenized money market fund, while Fidelity has recently introduced a tokenized money market fund on the Ethereum blockchain, indicating a serious commitment to real-world asset tokenization within traditional finance [4]

Core Viewpoint - Lloyd Blankfein, former CEO of Goldman Sachs, expresses concerns about potential economic crises due to narrow credit spreads and the rise of private credit, indicating a sense of foreboding in financial markets [1][5]. Financial Market Risks - Blankfein highlights the risks associated with narrow credit spreads, which are at their tightest in about 20 years, suggesting that this may lead to mispricing of risks in an uncertain economic environment [6]. - The private credit market has grown to a $1.7 trillion industry, driven by higher interest rates that offer better yields for investors, but this growth raises concerns about hidden risks and liquidity issues [6][7]. Economic Outlook - Blankfein warns that historical patterns suggest a "crisis of the century" occurs every four to five years, indicating that the market may be due for another unexpected downturn [3]. - Despite these concerns, Blankfein is currently fully invested in equities, anticipating that the Federal Reserve will lower rates, which could support a bull market [3][4]. Diverging Economic Predictions - Wall Street analysts are divided on the economic outlook, with UBS predicting a 93% risk of recession, while Deutsche Bank remains optimistic, raising its year-end S&P 500 target from 6,550 to 7,000 [4].

Economic Outlook - The former CEO of Goldman Sachs, Lloyd Blankfein, suggests that the US economy may be due for a crisis, noting historical patterns of crises occurring every four to five years [2][6] - Blankfein highlights that while the current economic environment shows resilience, there are underlying risks that could lead to significant economic events [2][6] Credit Market Concerns - Blankfein identifies credit markets as a potential source of the next economic problem, emphasizing the role of leverage that may not be immediately visible [3][6] - He points out that credit spreads are historically narrow, indicating a possible mispricing of risk by investors, which could lead to complacency in the market [4][5] - The ICE Bank of America US High Yield Index Option-Adjusted Spread is reported to be near 2.84%, close to historic lows, suggesting reduced perceived risk in the credit market [5] Private Credit Growth - There is a notable increase in assets under management in private credit, growing at a year-over-year pace of 14.5%, as investors seek higher yields [7] - Blankfein warns that the trend of leveraging in private credit could pose risks, particularly regarding the valuation of assets held by insurers involved in this space [8]

Federal Reserve Policy & Interest Rates - The market has fully priced in a 100% probability of the Federal Reserve cutting rates by 25 basis points at each of the next three meetings this year, totaling a 75 basis points reduction [2] - The market may be slightly disappointed if the Fed does not cut by 50 basis points [2] - The Fed is implicitly accepting a 3% inflation rate, despite aiming for 2%, and is prioritizing jobs data, which is currently weak, as the reason for cutting rates [3] - The expectation is that the Fed funds rate will eventually be brought down to 3% with cuts in every successive meeting [4] Economic Outlook - There is very little to no risk of recession or stagflation, with a 3% GDP print expected for the current quarter, following a 33% print last quarter [3][4] - Equity markets and credit spreads, currently at 300 in the high yield market, indicate growth and negate the possibility of recession or stagflation [5] - A significant stimulus package, along with productivity gains from AI, is expected to further boost the economy [6] - One trillion is expected to be spent in data centers [7] Credit Market Opportunities - Public market spreads have tightened, and rates have come down, but new issuance provides opportunities to gain alpha [8] - Direct lending is experiencing its most prolific period, with seven deals approved through the investment committee in the last week [9] - Lower interest rates are expected to spur more transactions, refinancings, and new issue activity for private equity [10] - Asset-based lending, particularly in financing property, plant, and equipment in the AI sector, offers attractive risk-adjusted returns with 60% LTVs and potential returns in the low to mid-teens [12][13] - Private credit offers a 500 basis point incremental spread pickup compared to public credit [13]

Core Viewpoint - State Street Investment Management has launched the State Street Short Duration IG Public & Private Credit ETF (PRSD), aiming to provide a blend of risk-adjusted returns and current income through short-term investment-grade debt [1]. Group 1: Fund Overview - PRSD is an actively managed ETF with a net expense ratio of 59 basis points [1]. - The fund primarily invests in short-term investment-grade debt, including both public and private credit instruments [1]. - The average duration targeted by PRSD is one to three years, focusing on a short-duration bond strategy [2]. Group 2: Private Credit Allocation - Approximately 10%-35% of PRSD's portfolio will consist of private credit instruments, sourced by Apollo Global Securities [3]. - The inclusion of private credit is intended to diversify the portfolio, offer new returns, and provide access to a less accessible market [3]. Group 3: Market Context and Demand - The launch of PRSD follows the earlier introduction of PRIV, the SPDR SSGA IG Public & Private Credit ETF, indicating a growing demand for such investment vehicles [4]. - State Street currently manages over 170 funds in the U.S., with significant assets under management in its largest ETF, the Technology Select Sector SPDR Fund (XLK), which has over $84 billion [4].

Market Structure & Investment Strategies - Public markets power the narrative, while private markets power the economy, prompting a re-evaluation of traditional 60/40 portfolios and the tools needed for better outcomes with less volatility [1] - Alternatives have historically benefited institutions, and there's a growing need to augment past strategies to cater to retirees globally [2] - The role of private capital is evolving as companies like Space X and Stripe stay private longer [2] - The distinction between public and private markets is shifting from risk to liquidity [5] - The traditional view of private markets as risky and volatile, and public markets as safe and liquid, is no longer accurate [6] Capital Expenditure (CapEx) & Financing - The high yield market has financed companies undergoing regulatory or technological changes over the past 30 years [9] - A massive CapEx boom is expected in the next ten years (by 2035), driven by data centers, sustainability, energy transition, and transmission lines [10] - 80-90% of the private credit market involves investment-grade counterparties and debt [11] - Private credit, particularly investment grade, is poised to have a significant impact, potentially larger than private equity in the last decade [14] - The CapEx cycle is concentrated in a few data and technology companies, raising questions about whether it masks the underlying economy driven by private companies [19] Economic Outlook & Inflation - Public market numbers beat consensus by 700 basis points (7%) in the second quarter, showing 11% versus 4% [20] - Credit portfolios show quality upgrades at a 3 to 1 ratio versus downgrades, indicating no widespread weakness [21] - Lingering inflation is evident, with companies finding it challenging to pass costs on to consumers [21][22][23] Investment Risks & Opportunities - There's a risk of over-investing in certain sectors, potentially leading to a misallocation of resources [24][25] - Investors should be wary of taking equity risk for a fixed rate of return, which could indicate a bubble [26] - The energy supply issue could limit growth, posing a challenge [29] - The lack of long-term investors is a concern for 10, 20, and 30-year infrastructure builds [30] Portfolio Allocation & Global Investment - Allocating 10-20% of a portfolio to alternatives has historically increased returns and reduced volatility [34] - The US remains the strongest, largest, and deepest market globally, with a robust economy, rule of law, banking system, creativity, and intellectual capital [47][48] - There's increased hedging of investments from overseas investors due to policy uncertainty and concerns about the Fed allowing inflation to run hot [41] - Europe's progress in energy transition and infrastructure development is slower than desired due to government oversight [42][43]

Alternative Asset Classes Overview - Explores the comparison of alternative asset classes (private equity, real estate, hedge funds, private credit, infrastructure, and commodities) with traditional investments [1] - Focuses on how plan administrators can incorporate alternative asset classes into retirement options [1]