Private Credit Shadow

The portfolio stays balanced roughly 56% alternative-asset managers (the 'toll collectors' raising the funds) versus 44% BDCs (the higher-yield lenders deploying the capital), but weights are tilted using relative strength (recent price momentum and proximity to 52-week highs) as a signal for who the market thinks is executing best. Among managers, Blackstone and Ares get modest increases on strong multi-month momentum, while TPG and Apollo are trimmed slightly since their trailing momentum has lagged peers even though Apollo's fundamentals (record Q2 earnings, rising analyst targets) remain solid. Among BDCs, Ares Capital, Hercules, and Main Street are increased slightly as they show strong momentum and trade near 52-week highs, signaling the market's confidence in their loan books. Golub Capital (GBDC) is exited entirely: it has the weakest momentum of the group and a Moody's negative outlook citing elevated leverage and weakening asset quality, replaced by Sixth Street Specialty Lending (TSLX), a similarly-styled BDC lender showing much stronger recent price strength.

Building the private-credit 'toll collector' portfolio from scratch with 8 names, split roughly 55% asset managers / 45% BDC lenders, and using each name's 1-3 month price momentum plus fresh news as a proxy for who the market thinks is deploying capital best. On the manager side, Blackstone gets the largest weight (16%) because it has the best 1-month momentum in the group and, per recent coverage, its more diversified, less credit-concentrated business model has made it the most resilient of the majors through the current private-credit redemption scare. Ares (15%) and TPG (14%) follow for their strong 3-month relative strength, while Apollo (10%) rounds out the managers - it has weaker recent momentum but has been credited with correctly anticipating credit stress in names like First Brands/Tricolor. We deliberately excluded Blue Owl and KKR: Blue Owl has the worst 6-month return in the universe and has been at the center of redemption freezes on its retail funds, and KKR's affiliated BDC (FS KKR) needed a shareholder-support package after a large NAV markdown, both signs the market is questioning their capital deployment right now. On the BDC side, Ares Capital (13%) and Golub Capital BDC (12%) are favored for capital preservation - they show the smallest 6-month drawdowns in the universe and, in GBDC's case, recent filings confirm still-strong credit quality with the large majority of the portfolio performing at or above expectations. Main Street Capital (10%) is included despite middling recent momentum because of its structural edge - internally managed with no incentive fees, growing NAV per share even as peers absorbed markdowns. Hercules Technology Growth Capital (10%) is added for its standout 1- and 3-month momentum, the strongest of any BDC, suggesting the market currently favors its deployment even though tech-lending carries some AI-disruption risk. We avoided FSK, OBDC, BXSL, and TSLX because their momentum is weak and, in FSK and OBDC's cases, they are directly tied to the two BDC platforms (FS KKR and Blue Owl) currently under the most acute redemption and NAV stress. The portfolio is fully invested with no single position above 16%, comfortably under the 20% cap.