Have you ever wondered where savvy investors are parking their money to outpace inflation and generate steady returns? I have, and it led me down a rabbit hole to a fascinating corner of the financial world: private credit. It’s not your typical stock or bond play—it’s a niche, high-yield opportunity that’s been quietly reshaping how wealth is built. Today, I’m diving into why private credit, particularly through vehicles like CVC Income & Growth, is capturing attention and delivering results for those willing to think outside the box.
Why Private Credit Is the New Frontier for Investors
The world of investing is always evolving, and private credit has emerged as a powerhouse. Unlike traditional bank loans, private credit involves non-bank lenders—think hedge funds or private equity firms—stepping in to provide financing to companies. Why does this matter? Because it’s filling a gap left by banks, which have tightened their lending standards since the 2008 financial crisis. The result? A market that’s exploded to over $2 trillion in assets under management in just 15 years, according to recent industry insights.
Private credit offers something unique: flexibility. Companies that might get turned away by banks—say, a small tech startup with a rocky balance sheet—can secure funding quickly through private lenders. These deals are often tailored to fit both parties, making them a win-win. For investors, this translates to higher yields than traditional fixed-income options, but with that reward comes a dose of risk. Let’s break it down.
What Makes Private Credit Tick?
At its core, private credit is about lending directly to businesses, often bypassing the rigid structures of banks or public markets. It’s also known as direct lending, and it’s a game-changer for companies that need fast, customized financing. Imagine a mid-sized firm looking to fund an acquisition but facing a credit crunch at the bank. A private credit fund steps in, offering a loan within days, structured to match the company’s cash flow needs.
Private credit is about agility—lenders move fast, and borrowers get solutions that banks can’t match.
– Financial analyst
Most private credit deals are senior loans, meaning they’re first in line to be repaid if things go south. This reduces some of the risk, but don’t be fooled—defaults can still happen, especially in a shaky economy. That said, the trade-off is compelling: yields often hover in the double digits, far outpacing traditional bonds or savings accounts. It’s no wonder investors are taking notice.
CVC Income & Growth: A High-Yield Star
One way to tap into this market is through an investment trust like CVC Income & Growth (LSE: CVCG). Managed by a team with deep roots in private equity, this trust focuses on sub-investment grade loans—think high-risk, high-reward debt from companies often backed by private equity firms. With roughly £232 million in assets, it’s a focused player in a massive market.
What sets CVCG apart? Over 80% of its portfolio is in floating-rate loans, which means the interest rates adjust quarterly. This is a big deal in today’s world of rising rates—it keeps yields competitive. As of March 2025, the portfolio’s loans had an average yield to maturity of 12.9%, a slight bump from 12.7% at the end of 2024. That’s the kind of return that makes you sit up and take notice.
- Floating-rate loans: Adjust to market conditions, protecting against rate hikes.
- High-yield focus: Targets sub-investment grade loans for bigger returns.
- Private equity backing: Lends to stable, cash-flow-generating businesses.
The trust’s strategy is refreshingly pragmatic. As one portfolio manager put it, they don’t chase flashy growth stories. Instead, they invest in “boring” companies—think steady, cash-generating businesses that can cover their debts even in tough times. It’s a disciplined approach that prioritizes downside protection over speculative upside.
Balancing Income and Opportunity
CVCG’s portfolio has two sides: the income-producing arm, which churns out steady dividends, and the opportunistic arm, which takes calculated bets on distressed assets. This dual approach is like having a reliable engine with a turbo boost—steady returns with a sprinkle of growth potential. Over the past five years, this strategy has paid off, with CVCG delivering an annualized total return of 16.7%, including a stellar 29.2% in 2024.
| Year | Annual Return |
| 2023 | 18.1% |
| 2024 | 29.2% |
| 5-Year Annualized | 16.7% |
This performance isn’t just luck—it’s a testament to the trust’s ability to navigate a complex market. By blending income and opportunistic plays, CVCG has outshone its peers, growing its net asset value while others in its sector stagnated. For income-focused investors, the trust targets a dividend of 9.25p per share annually, with the flexibility to pay extra when conditions allow.
The Risks You Can’t Ignore
Let’s get real—private credit isn’t a free lunch. It’s a form of leveraged finance, which means defaults can spike during economic downturns. If a recession hits, some borrowers might struggle to repay, and that’s a risk you need to stomach. However, CVCG mitigates this by focusing on senior loans and stress-testing investments to ensure they can weather tough times.
High yields come with high risks, but careful structuring can soften the blow.
– Investment strategist
I’ve always believed that understanding the downside is just as important as chasing the upside. CVCG’s team seems to agree, rigorously analyzing how much “headroom” a borrower has to cover debts. This focus on risk management makes the trust a compelling option for those who want high yields without betting the farm.
Why Now Is the Time to Consider Private Credit
The demand for private credit is soaring, and CVCG is positioned to ride the wave. In 2025 alone, the trust issued over 12 million new shares, raising cash to seize new opportunities. This flexibility is key in a market where timing can make or break returns. With interest rates still volatile, those floating-rate loans are a hedge against uncertainty, keeping yields robust.
But here’s the kicker: private credit isn’t just for institutional investors anymore. Trusts like CVCG make it accessible to everyday investors, offering a way to diversify beyond stocks and bonds. In my experience, adding a slice of private credit to a portfolio can act like a stabilizer—high yields provide income, while the opportunistic side chases growth.
How to Approach Private Credit Investing
Ready to dip your toes into private credit? Here’s a quick roadmap to get started:
- Understand the risks: High yields come with potential defaults, so know what you’re signing up for.
- Choose the right vehicle: Investment trusts like CVCG offer professional management and diversification.
- Monitor market conditions: Keep an eye on interest rates and economic trends, as they impact yields.
- Balance your portfolio: Pair private credit with other assets to spread risk.
Private credit isn’t a one-size-fits-all solution, but for those seeking passive income with growth potential, it’s worth a look. I’ve found that blending high-yield assets like these with more conservative investments creates a portfolio that’s both resilient and rewarding.
The Bigger Picture: Private Credit’s Role in Wealth Building
Private credit is more than a trend—it’s a structural shift in how capital flows. As banks pull back, private lenders are stepping in, and investors are reaping the rewards. The beauty of vehicles like CVCG is their ability to democratize access to this market, letting retail investors get in on the action.
Perhaps the most exciting part is the potential for long-term growth. With private credit markets still expanding, early adopters could see outsized returns as the sector matures. But it’s not just about the money—it’s about building a portfolio that can weather storms and deliver consistent income.
Private credit is reshaping finance, offering investors a unique blend of income and opportunity.
– Wealth advisor
As I reflect on my own investment journey, I’m struck by how private credit fits into the broader puzzle of wealth-building. It’s not about chasing the next hot stock—it’s about finding reliable, high-yield opportunities that align with your goals. For me, that’s what makes private credit, and trusts like CVCG, so compelling.
Final Thoughts: Is Private Credit Right for You?
Private credit isn’t for everyone, but it’s hard to ignore its appeal. With yields that dwarf traditional fixed-income options and the potential for capital growth, it’s a powerful tool for investors willing to embrace some risk. CVC Income & Growth stands out as a way to access this market, offering a blend of steady income and opportunistic plays that’s tough to beat.
Before you jump in, ask yourself: Are you comfortable with the risks? Do you want a hands-off way to invest in a growing market? If the answer is yes, private credit could be the missing piece in your portfolio. As always, balance is key—mix it with other assets to create a strategy that’s uniquely yours.
In a world where low yields are the norm, private credit feels like a breath of fresh air. It’s not perfect, but for those willing to do their homework, it’s an opportunity to unlock serious returns. What’s your next move?
