The Compound and Friends · Sep 28, 2026 · 45m · 32m saved
With Erik Hirsch, Co-CEO of Hamilton Lane
Private credit default rates are running around 2%, Erik Hirsch said, even as individual investors pull money out of private credit funds.
Headlines have treated those withdrawals as a sign of losses to come. Hirsch said the data does not show that yet, and that the investors leaving are mostly new to the asset class and their advisers are new to it too.
"There is an immaturity around this whole space that is not surprising."
Erik Hirsch, co-CEO of Hamilton Lane, on The Compound and Friends, joined the firm in the late 1990s and worked on its first secondary deal in 2000 as a young analyst. Hamilton Lane places capital with private fund managers for pensions, endowments, sovereign wealth funds, insurers, banks and individuals.
The full interview is covered here so you can skip it. 45 minutes of audio, 14 minutes of reading.
Here are the 10 arguments that matter.
Key Takeaways
Private equity is equity, and it is correlated with public markets
The quarter-long reporting lag is what makes it look otherwise
The gap between the best and worst private managers is as wide as 20 years ago, despite far more capital
Only about 20 firms have real businesses raising money from individuals, out of thousands of managers
Default rates in private credit are around 2%, and 99% of the loans in the books he reviews are performing
A secondary buyer must book a fund stake at the fund manager's mark, even if it paid 65 cents on the dollar
Average secondary discounts today run about 13%, he said
Hamilton Lane invests in less than 1% of the secondary deals it sees
Investors leaving private markets are putting everything into a narrow set of mega-cap public stocks
The big gains in SpaceX and Anthropic were made by private holders, not public ones
1. Provider, Not Fund Manager
The host opened with a chart of Hamilton Lane's assets under management: about $6 billion in 2005 and about $146 billion now, with more than a trillion dollars under advisement. Hirsch has led the firm as co-CEO for about two and a half years.
Hamilton Lane supplies capital to funds like Blackstone's and KKR's
"Hamilton Lane is what we think of as a private market solutions provider." — Erik Hirsch
He said the firm is not a fund manager like Blackstone or KKR. It puts clients' money into firms like those. Most people assume they can invest in private markets on their own, he said, but finding access, picking managers and building portfolios is something even large institutions mostly outsource.
"Doing the private markets is really hard." — Erik Hirsch
Thousands of managers nobody has heard of
When he asks people to name private fund managers, he said, they run dry after 10 or 12 names. Most managers raise money from institutions, run $1 billion or $2 billion, and work in local markets and niche sectors around the world.
