Private credit has long been a playground for institutions - pension funds, insurance companies, and sovereign wealth vehicles allocating billions to direct lending, mezzanine debt, and asset-backed strategies. But today, a powerful new wave is underway: private credit is moving downstream to the mass-affluent investor, thanks to fintech platforms, interval funds, and simplified access vehicles.

With private credit AUM surpassing $1.6 trillion globally, the opportunity is too significant for retail investors to ignore. And with structured platforms reducing barriers, direct lending and credit-focused products are quickly becoming an accessible part of the retail portfolio.

Why Private Credit Appeals to the Mass Affluent

For everyday investors with $100K–$1M in investable assets, private credit offers unique advantages:

• Attractive Yields Yields in direct lending and asset-backed strategies typically range from 8–12%, compared to 4–5% for traditional fixed income.
• Diversification Benefits Private credit returns have historically shown low correlation with public equities, offering ballast in volatile markets.
• Floating-Rate Structures Many private credit deals are tied to floating rates, providing a natural hedge in rising-rate environments.
• Tangible Underlying Assets Loans are often backed by collateral (real estate, receivables, equipment), providing downside protection.

Data Point: Interval Fund Growth

According to Preqin's 2025 mid-year report:

• Interval fund AUM has surpassed $150 billion, with over 72% sourced from retail investors.
• Non-traded BDCs (Business Development Companies) have also seen inflows of $20 billion in the past 12 months, much of it from mass-affluent channels.
• Platforms enabling fractional participation in direct lending pools have quadrupled their user bases since 2021.

This clearly signals that retail appetite for private credit is not a passing fad—it's a structural shift.

The Platform Advantage

The democratization of private credit isn't possible without technology infrastructure. Platforms like Capital Engine® are essential for making these products accessible, compliant, and transparent.

Key platform enablers include:

• Fractionalization: Breaking multi-million-dollar lending pools into ticket sizes as low as $10,000.
• Digital Onboarding: Automating KYC/AML, accreditation, and suitability assessments.
• Liquidity Features: Integrating redemption programs and secondary markets.
• Transparent Dashboards: Providing investors with performance analytics, loan portfolio breakdowns, and risk disclosures.
• Advisory Integration: Equipping RIAs and broker-dealers with tools to offer private credit as part of diversified portfolios.

Visual: Retail Private Credit Workflow

Risks to Watch

As with all private market strategies, retail investors must be educated about the risks:

• Illiquidity: Even with interval funds, redemption is periodic, not daily.
• Credit Risk: Loan defaults can impair principal.
• Valuation Transparency: NAV reporting is less frequent than public markets.
• Regulatory Oversight: Ongoing monitoring by the SEC and FINRA will be crucial as retail participation grows.

Platforms must play a leading role in disclosure and investor education to ensure responsible growth.

The Road Ahead

By 2030, private credit could be as common in retail portfolios as REITs are today. The shift will be accelerated by:

• Technology platforms reducing friction and cost-to-serve
• Regulatory clarity encouraging responsible distribution
• Investor demand for yield and diversification

Capital Engine® is building the infrastructure to make this future a reality—providing compliant, scalable access to direct lending and asset-backed strategies for a new generation of investors.

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In the Engine Room Podcast

Up Next: Advisors & Alts: Bridging the Education Gap — How RIAs and wealth managers are preparing for retail demand in private markets. If you missed any of the earlier issues, you can catch up at: Capitalengine.io/newsletter

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