Goldman Sachs Group Inc. and JPMorgan Chase & Co. are offering hedge fund clients ways to bet against the private credit market, according to people familiar with the matter. Both banks have assembled baskets of publicly listed companies with significant exposure to private credit, including European financial institutions, business development companies, and alternative asset managers. Clients can either invest in these bespoke indices or use them to position against market risks in the sector.
The move comes amid mounting turbulence in private credit, driven by waves of investor redemptions and concerns that lenders are overexposed to software companies—a sector undergoing rapid transformation due to advances in artificial intelligence. Much of the strain is concentrated in the United States, where private credit funds have attracted tens of billions from retail investors. Firms such as BlackRock Inc., Morgan Stanley, and Cliffwater have recently restricted withdrawals after redemption requests exceeded allowable limits. Pimco president Christian Stracke noted that 20% to 30% exposure to a single sector is prompting investors to exit before potential losses materialize.
Goldman’s indices cover a range of targets, from European banks with private credit exposure to broader alternatives managers, while JPMorgan’s baskets focus on alternatives managers and business development companies. Bank of America Corp. had previously offered similar baskets targeting European firms, including Partners Group Holding AG, Deutsche Bank AG, and Axa SA, but withdrew its recommendation following concerns about market sensitivity. Representatives for the banks declined to comment.
Bloomberg reports that these offerings reflect Wall Street’s growing caution toward private credit, a $1.8 trillion market that has expanded rapidly over the past decade but now faces liquidity challenges and sector-specific risks. Investors are increasingly seeking hedges and alternative strategies to protect against potential losses, highlighting the fragility of a market once considered a steady source of yield in the low-interest-rate era.
With private credit funds imposing withdrawal limits and investor anxiety spreading, Goldman and JPMorgan’s structured products underscore how banks are monetizing both risk and uncertainty in the evolving financial landscape.
