Allocators urged to screen track record over ABF label

Manager selection was the recurring theme at the Alternative Credit Investor Conference 2026, where allocators weighed AI-driven dispersion, a crowded asset-backed finance market and Europe's case as a diversifier, Alternative Credit Investor reported.

One speaker split managers into "house money vs tilt money": those who made money on AI can pick their spots, while those who missed the run are under pressure to catch up and risk overpaying. The same divide applies to how managers handle a volatile macro environment and deteriorating credit quality, speakers said. AI is "creating zombies and embracers", one said of the companies investors must choose between. Dispersion between managers is already significant, and the cycle turn will bear it out.

For allocators, the diligence question shifts from the label to the record, with track record length moving up the checklist and the ABF label carrying less weight on its own. Many funds now call themselves ABF while running collateralised loan obligations or corporate financing with some securitisation attached, one speaker noted.

ABF is crowded, and origination is its test. Newer entrants tend to be credit experts rather than collateral experts, and a run of negative private credit headlines is pushing the sector to differentiate. "Origination is what is keeping us up at night," one speaker said. "We no longer buy portfolios." Another argued that "ABF isn't risky, the businesses are."

Proskauer's index of 746 US senior-secured and unitranche loans put the overall default rate at 2.41%, as Private Wealth Daily previously reported. Sub-$25m EBITDA borrowers defaulted at 2.2%, up from 1.9%, while the largest loans fell to 1.7%.

Europe remains largely unpenetrated, speakers said. Volatile US policymaking has prompted investors to look across the Atlantic. One speaker said Solvency II makes ABF uneconomic for EU insurers and pushes their demand to the US, leaving the region's own insurance balance sheets largely outside the buyer base for European ABF paper. The European case rests on diversification from US credit, not on local insurance demand.