Private credit and private equity: Alternative investments for diversified portfolios

Private credit and private equity are compelling alternative asset classes that have long been regarded as investment opportunities traditionally reserved for large institutions and accredited investors. These exclusive opportunities, once out of reach for most are becoming increasingly accessible to high-net-worth individuals who are seeking more than the conventional mix of stocks and bonds.

Walker Wealth Management (formerly O’Coin Walker and Associates) is proud to announce the expansion of its investment platform to include both private credit and private equity, opening the door to additional opportunities. Scott Walker, Portfolio Manager and Lead Investment Advisor at Walker Wealth Management says, “Clients appreciate the uniqueness of these strategies because they offer something beyond the traditional mix of stocks and bonds and help broaden their investment exposure.”

Jennifer Hiltz, Investment Advisor at Walker Wealth Management adds. “For investors seeking both stability and growth, private markets provide access to opportunities that complement traditional holdings. The main thing with private credit and private equity is to diversify your portfolio.”

Understanding private credit

Private credit refers to loans made directly to businesses by private investors or lenders, rather than through public markets or traditional banks. These loans are typically extended to middle-market companies – firms with annual revenues between $10 million and $1 billion. Private credit offers high-net-worth investors an attractive way to diversify beyond the public markets.

One of the key draws of private credit is the potential for higher yields, with many deals offering annual returns above what public markets can provide. The loans have flexibility, often maturing within 10 to 24 months, giving investors quicker access to capital. Unlike public equities or bonds, returns are less influenced by daily market swings and private credit can be custom tailed to borrower needs with fewer regulatory constraints.

Understanding private equity

Private equity involves investing directly in private companies or taking public companies private with the goal of improving operations and selling them for a profit. Instead of buying shares in a public market, investors pool their capital to purchase, grow, or restructure private businesses. For investors, private equity offers the potential for outsized returns and access to opportunities beyond traditional markets.

Within private equity, venture capital stands as the highest risk category, backing early-stage start-ups that often lack revenue, cash flow, and may need additional financing before an exit. The trade-off, however, is the potential for explosive growth if the business succeeds.

Growth equity offers investments in companies with proven business models and steady revenue growth, where additional capital allows the company to move to the next stage.

At the lower-risk end are buyouts which target mature companies with positive cash flows. Additional returns are driven by operational improvements, cost efficiencies, or strategic capital restructuring.

Unlocking the power of private markets

Private credit and private equity add powerful diversification and balance to an investment portfolio. Jennifer Hiltz says, “The advantage of private credit and private equity is that their performance is less influenced by the daily swings of public markets which are nice diversifiers because it removes the emotional volatility.”

Historically, these asset classes have delivered stronger returns, with pooled performance often exceeding traditional benchmarks depending on the strategy. Scott Walker adds, “Of the companies in North American that generate over $100 million in general revenue, over 80% are privately-held companies. I think there’s are huge opportunities here to make good, consistent returns.”

Private credit, in particular, offers compelling risk-adjusted outcomes, frequently outpacing high-yield bonds. Beyond returns, these investments open doors to unique opportunities with non-public companies, specialized industries, and tailored financing deals.

For investors seeking both stability and growth potential, private markets provide access to opportunities that complement traditional holdings.

Risks that shape returns

While private credit and private equity offer compelling opportunities, they come with unique risks. Liquidity can be limited, as positions are privately negotiated and cashing out depends on market demand, macro conditions, transaction volumes, and discounts on underlying assets.

Due diligence is essential in private credit and private equity, where transparency is limited and borrowers are not bound by public disclosure rules. While historical defaults are low, credit risk persists, particularly in economic downturns. Each investment can include covenants, equity stakes, or tailored terms, making careful analysis crucial.

Private equity often involves deal structured with significant debt, a strategy which can boost returns but also amplify losses in a market downturn. Valuing these investments can be tricky, as lack of market pricing can make it difficult to assess portfolio value accurately.

Success starts with the right manager

Choosing the right fund manager can make all the difference in private credit and private equity investment success. Walker Wealth Manager leverages exclusive access to BMO Nesbitt Burns’ North American Investment Private Markets Team, led by Arthur Dicohon, Head of Alternatives Research for Canada, and Ewa Townsend, Director of Alternative Strategies. Townsend says, “Not all managers are made equal. If you’re not participating in top quality manager funds, you are relegated to public market performance or worse with much less liquidity. This is why we believe diligence and independence are key factors when deciding where to allocate capital within private markets. Getting it right in private markets is also much more rewarding.”

At Walker Wealth Management, clients benefit from a team whose expertise is both broad and rooted in alternative investments. Scott Walker’s experience with large investment firms managing funds for major institutions and pension plans brings an institutional-level perspective to portfolio construction.

Jennifer Hiltz offers a decade of commercial banking experience, having helped finance mid-sized companies with private credit funds and overseen their day-to-day Scott Walker says “Our team is excited to help you explore how these strategies work, and to provide clear insight into their potential benefits and risks as part of a well-diversified portfolio.”

Together, their combined backgrounds allow them to identify top-performing funds and uncover opportunities to ensure clients gain access to carefully managed, high-potential private market investments.

If you’re interested in learning more about Private Credit, Private Equity, or other alternative investment strategies, we invite you to connect with Scott Walker and Jennifer Hiltz at Walker Wealth Management.

Call them at (705) 326-2686 or reach out via email to [email protected] or [email protected].

BMO Private Wealth is a brand name for a business group consisting of Bank of Montreal and certain of its affiliates in providing private wealth management products and services. Not all products and services are offered by all legal entities within BMO Private Wealth. Banking services are offered through Bank of Montreal. Investment management, wealth planning, tax planning, and philanthropy planning services are offered through BMO Nesbitt Burns Inc. and BMO Private Investment Counsel Inc. Estate, trust, and custodial services are offered through BMO Trust Company. Insurance services and products are offered through BMO Estate Insurance Advisory Services Inc., a wholly-owned subsidiary of BMO Nesbitt Burns Inc. BMO Private Wealth legal entities do not offer tax advice. If you are already a client of BMO Nesbitt Burns Inc., please contact your Investment Advisor for more information. Nesbitt Burns Inc. is a member of the Canadian Investor Protection Fund and the Canadian Investment Regulatory Organization. BMO Trust Company and BMO Bank of Montreal are Members of CDIC.  

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This article was sponsored by Walker Wealth Management – BMO Nesbitt Burns, a 2025 OrilliaMatters Reader Favourite.