Millennium, Point72, Third Point to Enter Booming Private Credit Market

Large hedge funds like Third Point, Point72, and Millennium Management are entering the private credit market. These firms are creating new funds focused on direct corporate lending outside traditional banking systems. Third Point is forming a listed fund called Third Point Private Capital Partners for this purpose. Millennium is preparing its first new fund in over 30 years. Point72 has hired experts like Todd Hirsch from Blackstone to expand its private credit operations. These changes reflect a shift in how hedge funds are adjusting strategies to compete in evolving financial sectors.

Understanding Private Credit and Why It Appeals to Hedge Funds

Private credit refers to lending that avoids traditional bank loans and public market securities. This area includes high-yield corporate loans, royalty financing, and other non-liquid debt instruments. These assets are not actively traded and require long-term commitments from investors. Hedge funds that usually work in fast-paced markets are moving into this slower, steadier space. They see it as a way to generate more predictable returns. The move marks a change in how hedge funds seek to attract and serve investors in a more stable environment.

Diversification is another reason hedge funds are expanding into private credit. Firms like Millennium and Point72 want to become full-service financial institutions. They are preparing for future leadership changes and long-term business growth. Institutional clients such as pension funds and sovereign wealth funds are requesting more investment options. They’re eyeing private credit for its promise of yield without public-market volatility. Private credit is no longer considered niche but is becoming central to the strategies of modern hedge funds.

UK Wealth Managers Explore Private Market Investments for Clients

UK wealth managers are also turning toward private market investments for their wealthy clients. RBC Wealth Management and Evelyn Partners are two firms exploring this path. They are interested in using the Long Term Asset Fund (LTAF), a combination of private and public assets. These funds could offer clients improved retirement results in the form of increased returns. However, LTAFs come with limits on withdrawals and concerns over liquidity. Despite challenges, firms view them as important tools in shaping future investment portfolios.

Still, not all investors support this shift toward private market funds like LTAFs. They express concern over the short track record of these products. Some remember earlier liquidity issues that led to fund closures and investor losses. Yet demand for private asset exposure remains. Financial institutions are working out how to expand access while managing risks and meeting regulations. The goal is to make broader investment possible without triggering past problems or compromising the safety of investors.

Investor Caution Grows Amid Record U.S. Bond Market Outflows

Meanwhile, attention is shifting in the United States as bond markets experience outflows. Around $11 billion left long-term bond funds in the second quarter of 2025. This is the largest such exit since early 2020. Analysts blame rising concern over US fiscal policy and long-term debt projections. Former President Donald Trump’s tax proposals are a major point of debate. Pundits warn that such policies would take trillions of dollars to add to the national debt if implemented. That sort of prognosis makes investors nervous about holding long-term fixed-income exposures.

Image 1, US long-term bonds over the years, provided by FT, EPFR, June 30, 2025

These investment trends raise broader questions about alternative finance’s future role. Hedge funds are absorbing capital once directed toward public debt markets. In contrast, decentralized finance platforms have yet to attract comparable institutional interest. The strength of hedge funds in private credit reflects a focus on regulatory stability and scale. Whether blockchain-based lending systems can gain ground remains uncertain. The future will depend on how traditional and decentralized platforms adapt to ongoing changes in global financial markets.