Private Credit Performance: Data from 300+ Funds | LP Data

Private Credit by the Numbers

Private credit has grown from a niche strategy to $1.5+ trillion in AUM. LP Data tracks 300+ private credit funds from pension disclosures. This is actual performance data, not marketed targets.

LP Data Private Credit Coverage:

Vintage Range	Funds Tracked	Avg. Median IRR
2015-2019	108	9.5%
2020-2023	162	11.6%

Post-2020 vintages show higher IRRs because base rates rose (SOFR went from 0% to 5%+). Private credit is floating-rate, so these funds benefited directly from rate increases.

Strategy Performance Breakdown

Direct Lending (largest sub-strategy)

Senior secured, first lien loans to middle-market companies

Floating rate: typically SOFR + 500-650 bps

LP Data benchmark: 8-12% net IRR, 1.2-1.4x TVPI

LP Data Private Credit Benchmarks by Vintage:

Vintage	Funds	Median IRR	Median TVPI	Median DPI
2023	31	16.4%	1.11x	0.07x
2022	44	12.2%	1.18x	0.28x
2021	43	11.2%	1.21x	0.00x
2020	44	10.6%	1.20x	0.12x
2019	23	12.4%	1.28x	0.51x
2018	20	8.9%	1.38x	0.61x
2017	26	9.5%	1.39x	0.79x
2016	21	8.7%	1.31x	1.59x

What stands out:

2016 vintage has returned capital (DPI > 1.0x) and still has TVPI upside

2022-2023 vintages show elevated IRRs from base rate increases

TVPI clusters around 1.2-1.4x. Lower than buyout, but with lower risk too

How to Evaluate Private Credit Funds

Yield vs. Total Return

Private credit funds generate returns through:

Current yield: Cash interest paid quarterly (majority of return)

PIK income: Accrued, non-cash interest (watch for excessive PIK)

Fees: Origination, prepayment, amendment fees

Gains/losses: Mark-to-market changes, realized losses

Credit Quality Indicators:

Non-accrual rate: % of portfolio not paying interest (<3% is healthy)

Fair value / Cost: Average mark across portfolio (>0.97 is solid)

Interest coverage: Borrower EBITDA / interest expense (>2.0x preferred)

Comparing to Private Equity:

Metric	Private Credit	Private Equity
2020 Median IRR	10.6%	10.5%
2020 Median TVPI	1.20x	1.33x
Return profile	Income-focused	Growth-focused
Loss rate	Lower (senior secured)	Higher (equity risk)
J-curve	Minimal	Significant

Private credit offers similar IRR with lower volatility and faster distributions.

Who Invests and Why

Pension fund allocations:

LP Data tracks private credit investments from 161 pensions. Typical allocation: 3-8% of alternatives sleeve, and growing.

Why institutions like it:

Yield pickup: 200-400 bps above public high yield

Floating rate: Natural hedge against rising rates (proven in 2022-2023)

Lower correlation: Less tied to equity market swings

Seniority: Better recovery in defaults (60-80% vs. 40% for unsecured)

Manager selection matters:

2019 Vintage	Top Quartile	Median	Bottom Quartile
IRR	15.2%	12.4%	8.1%
TVPI	1.38x	1.28x	1.15x

Top quartile funds deliver 700+ bps more IRR than bottom quartile. Picking the right manager is the difference between 15% and 8%.

Risks:

Credit cycle: Defaults rise in recessions (currently low at 2-3%)

Rate reversal: If SOFR drops, yields compress

Valuation lag: NAV marks can trail actual deterioration

Concentration: Many funds hold the same underlying credits