Family offices in private credit: allocation, yield and risk

Private credit is a small but widening allocation for family offices, held mostly through funds rather than direct loans, and it enters 2026 under more regulatory scrutiny than at any point in its growth. Goldman Sachs' 2025 Family Office Investment Insights survey found private credit at 4% of the average portfolio, up from 3% in 2023, with the share of offices holding none falling from 36% to 26%. Campden Wealth's 2025 North America report also put the allocation at 4%, Citi's 2025 report at 3%, and UBS's 2026 report, summarised by Canadian Family Offices, at 3%. StepStone's 1H26 direct lending review reported US first-lien gross asset yields of 9.17% in June 2026, while the Bank of England's July 2026 Financial Stability Report stated that "risky credit markets, including private credit, remain vulnerable to a tightening in financing conditions".

Allocation and intentions

The intentions diverge. BlackRock's 2025 survey of 175 single family offices found private credit had the highest planned increase of any alternative asset class, with special situations and direct lending the preferred strategies; the Caproasia summary shows 62% favouring special situations and 53% direct lending. BNY Wealth's 2025 survey found only 9% prioritising private credit and noted it "has fallen in ranking as global interest rates decline". FINTRX data reported by Chief Investment Officer in 2026 show 24.1% of all family offices in its database interested in private credit but only 6.3% of offices formed in the second quarter of 2026, the sharpest generational gap of any asset class.

Direct lending or funds

Most family office exposure comes through funds. Campden's 2025 report describes private credit as "mainly accessed through funds", and Goldman's 2025 release says offices rely primarily on managers for alternatives other than real estate. Direct lending by a family office to a company requires origination, credit underwriting and workout capability that few offices maintain. Where families lend directly it is usually to businesses they know, or as co-lenders alongside a fund.

The fund market itself is tilting further towards direct lending. StepStone found direct lending accounted for 69% of private debt fundraising in 2026 to July, up from 67% in 2025, although total private debt fundraising of about $133bn was running well below the $186bn raised in 2025. Preqin's 2026 Global Reports project private credit assets of $4.5tn by 2030, and Moody's expects the market to exceed $2tn in 2026.

What it yields

Goldman's 2025 research, reported by Worth, cited direct lending yields of 8% to 9%. StepStone's June 2026 data put US first-lien gross asset yields at 9.17% and European at 8.85%, with median US contractual spreads of 510 basis points over a three-month SOFR of about 3.7%. Realised returns have been lower than gross yields: the Cliffwater senior direct lending index returned 8.1% over the four quarters to March 2026, down from 10.5% a year earlier, with trailing net realised losses of 0.37% and net unrealised losses of 1.28%. New US deals were being struck at 4.62x total leverage with interest coverage close to 2.5x.

Risks flagged in 2025 and 2026

Three sources are worth reading in full. The Bank of England's July 2026 report lists "high leverage, complexity and opacity" as persistent vulnerabilities, notes that "redemption requests have been elevated in several retail funds" with some limiting withdrawals, and says its second system-wide exploratory scenario is examining how stress could propagate in these markets. It also cites an OECD estimate that private credit's share of AI investment financing rose from 9% in 2024 to 34% in 2025.

Moody's September 2026 note identifies four signals. The asset-weighted one-year default probability of public business development companies was about 0.49% in June 2026, against 0.25% for Baa-rated corporates, a gap that had more than tripled in a year. Payment-in-kind income had risen to roughly 8% of public BDC gross investment income from about 5.5% in 2021. Withdrawal requests at some non-traded vehicles reached about 10.5% by spring 2026, more than twice a typical 5% quarterly gate. StepStone's data show BDC payment defaults at 2.1% in March 2026, or 4.3% including PIK amendments.

For a family office the practical questions are liquidity terms, how the manager marks loans, and PIK exposure. Rate sensitivity is covered in higher-for-longer rates and family office debt, and the role of private credit against cash and bonds in cash and fixed income for family offices. Families who are themselves borrowers against private portfolios will find the lender's perspective in NAV loans for family offices explained.