MSCI Launches Private Credit Factor Model to Bring Transparency to Rapidly Growing Asset Class
Expanding MSCI’s multi-asset risk modeling suite, the new tool analyzes private credit risk within a total portfolio context
As investors continue to increase their allocations to the private credit market, they face a critical challenge: A lack of data and insights into their investments can obscure their view of risks of private investments within the context of their total portfolio.
Over the past decade the explosive growth in private credit, driven by investors’ search for yield and structural shifts in capital markets, has outpaced the tools needed to manage it. And institutional investors such as pension funds are being asked by plan participants, boards and other stakeholders to shed light on these often-opaque assets.
Designed to address these challenges, the Private Credit Factor Model integrates private credit into the systematic, factor-based framework that forms the basis of modern portfolio management. Powered by MSCI’s award-winning analytics and cross-asset modeling capabilities, the model offers institutional investors a consistent, integrated view of risk across public and private markets. These insights draw on MSCI’s Private Assets Universe data – one of the most extensive and highest quality sets of cashflow and valuations data in the private markets industry.
“Private credit requires enhanced analytical tools and insights as it plays an increasingly important role in diversified investment portfolios,” said
Available through MSCI’s Analytics platform, the model enables risk teams to:
- Decompose risk across private credit strategies, including corporate lending and asset-backed debt, using region- and strategy-specific factors that capture market, structural, and idiosyncratic drivers of risk.
- Assess how private credit exposures respond to macroeconomic shocks and shifting credit conditions — and understand their impact on total portfolio risk through scenario analysis and stress testing.
- Model private credit exposures despite limited data availability, using MSCI’s proprietary estimation and mapping techniques to address illiquidity, lagged valuations and sparse pricing.
- Integrate private credit into total portfolio risk reporting to support investment decisions, board level oversights, risk budgeting and strategic asset allocation.
Powered by data from over 1,500 private capital funds, the Private Credit Factor Model leverages the
The model is part of MSCI’s expanding suite of private credit analytics, which are designed to help investors measure, manage and benchmark the asset class’s risk. The Private Credit Factor Model compliments the
“MSCI is continuing to expand the boundaries of risk modeling across asset classes,” said
The launch of the Private Credit Factor Model also represents the latest enhancement to MSCI’s multi-asset class analytics suite, which is available through
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This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to future events or performance and involve risks that may cause actual results or performance differ materially and you should not place undue reliance on them. Risks that could affect results or performance are in MSCI’s Annual Report on Form 10-K for the most recent fiscal year ended on
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