Institutional Investors Pivot from Private Credit to Infrastructure

The decline in private credit’s portfolio share does not signal a market collapse, but rather a strategic cooling. According to data from Canoe Intelligence, private credit’s net asset value actually grew by 20% since June 2024. However, investors are opting not to redeploy capital at the same rate as they receive loan repayments. Mike Muniz, chief strategy officer at Canoe, describes this as a shift toward selectivity, where institutional limited partners exhibit patience over aggressive reinvestment.

Infrastructure has emerged as the primary beneficiary of this capital rotation, recording $1.38 billion in net inflows. Much of this momentum is fueled by the "Core Plus" strategy, which emphasizes stable, income-generating assets. Digital infrastructure, particularly data centers, serves as a cornerstone for these long-duration bets. Meanwhile, venture capital has officially overtaken private credit in portfolio size, buoyed by institutional enthusiasm for AI-driven startups and a desire to secure positions in what investors hope will be a high-performing vintage year. Hedge funds have also expanded their footprint, growing from 15% to 22% of net value within six months.