The 2026 Private Credit Liquidity Crunch | Leyla Kunimoto on Redemptions in Semi-liquid Vehicles, Private/Public BDCs, and the Future of Alternatives

Today's episode is brought to you by Pictet Asset Management and their AI enhanced ETF range, ticker PQNT and PQUS. You'll hear more about how they're using AI to enhance equity exposure later in the show. For now, let's get into it. I'm joined by Leila Kunimoto, founder and editor of Accredited Investor Insights. I'm curious what your journey into into the space was. How did you get into private markets?

I'm an investor. I have been investing in the public markets since I was in college. And I stumbled into private markets kind of almost by accident. My gateway was real estate, private placement real estate, and that was in 2020. And then from there, it very quickly went to private credit, private equity. I joined a lot of investor groups. I started attending conferences and saw I've kind of seen this democratization of access to alts happen in front of us. There was this big push by large asset managers to come into the space, and that was there witnessing it happen. So I I've been exposed to

And so talk about alternatives. So that's hedge funds, private equity, real estate, private credit. Historically, the investors that have been the very large institutions, the college endowments, the charitable trusts, insurance companies, and other types of things. But increasingly to grow, these alternative managers have been looking to raise capital from alternative sources of capital, retail investors. That's, I guess, through individuals, but also through wealth channels, so wealth managers, RIAs. Tell us what you witnessed in 2020.

I remember it was probably 2021 or 2022 when I was at a conference. It's an investor conference for high net worth investors, kind of small family offices. One of the conferences I attended, there was one of the presenters at the time was KKR. And I remember sitting there thinking, we studied case studies on how KKR did buyout deals back when I was in college. I have a degree in finance. And I'm sitting in the audience thinking, goodness, why am I so lucky? They're coming for my $50,000 check or whatever that check was right at the time through the wealth channel. So that's kind of turned on a

What is the J curve and these new semi liquid structures? You mentioned the advantage, but what is the disadvantage and how does that relate to what we're seeing right now?

Yeah. Let's talk about the traditional drawdown funds. Let's go back. Let's go back to the nineties and eighties and the Yale endowment model. Back in those days, access to alts, just the broader alternative space that didn't encompass private markets or public markets. Access to alts was done via drawdown funds. And the drawdown fund is when you commit, if you're an endowment, you commit $2,000,000 to a GP, to a general partner. And they call that money typically over a period of two years in increments. That money gets invested and you don't have the option to get out as an investor until th

If I buy a stock of Apple today, immediately, I am getting access to the earnings streams of that company. Historically, private equity, you had to tie money up and not be able to access the return stream until a certain period of time. Now with these new evergreen structures, they allow investors to immediately get access to that.

So in the drawdown funds, there wasn't like a date. That was one of the disadvantages. You don't know when your money is coming back because the GP or the sponsor, the general partner buys an asset. Let's say it's a privately held company. They buy that company, they call 20% of your capital, deploy that capital into that company. And then se