Janus Henderson Highlights Asset-Backed Lending in Midyear Outlook
Global asset management group Janus Henderson Investors recently released its Investment Outlook Mid-Year 2025, offering its overall view on the economy, along with certain market trends.
According to the report, while the U.S. tariff rollout and ongoing geopolitical uncertainty may lead to further market turbulence, one area emerging as a potential portfolio diversification tool is private credit, specifically asset-backed lending, or ABL.
The report states that the global private credit market now exceeds $2 trillion in assets under management, with potentially a market size of more than $40 trillion. This growth has come primarily through direct lending, as banks have become more conservative with certain lending activities, allowing private credit to step in and fill the void. A recent slowdown, however, in private equity deals and a higher rate environment has led to a wider search for diversification and a greater interest in ABL.
The report continues that, while ABL may be a compelling strategy for investors seeking a diversified return stream, many investors often associate private credit with direct lending and may be unfamiliar with ABL. Unlike direct lending, which is dependent on the borrower’s cash flow and enterprise value, ABL is secured by tangible or financial assets, like receivables, inventory, and real estate. This collateral-based structure offers a potentially more secure form of lending, especially valuable in today’s fragmented economic climate.
“Given its ability to provide shorter-duration loans and lower correlation to equities compared with direct lending, ABL can offer strong diversification within a multi-asset portfolio, reducing overall risk and volatility,” says the report.
Janus Henderson’s Outlook further points to ABL’s structural provisions, such as first-loss equity subordination, to support risk mitigation. These provisions may provide warning signs of potential collateral deterioration. ABL also usually deals with only one lender, allowing the sole party to structure and control decisions, which can further mitigate risk.
Alternatively, direct lending often accounts for risk at origination through pricing, allowing little opportunity for lenders to adjust during the loan term. Also contrary to ABL, direct lending usually involves multiple lenders.
Overall, the firm reports that ABL and direct lending are complementary strategies, each serving distinct roles in portfolio construction and each having distinct potential benefits for investors.
According to Janus Henderson, as investors continue to seek alternative opportunities, ABL may offer a unique diversification opportunity, especially during uncertain economic times.
In an April 2025 guest contribution to AltsWire, Greg Friedman, managing principal and chief executive officer of Peachtree Group, also discussed how private credit – especially strategies focused on senior secured lending, real estate credit, or asset-backed deals – might be a powerful complement to traditional fixed income.
Headquartered in London, Janus Henderson is a global asset management group with 25 offices globally, more than 2000 employees, and $372.2 billion client assets under management, as of March 31, 2025. The Janus Henderson affiliate, Privacore Capital, recently launched its alternative growth tender offer fund.
This article is for informational purposes only and does not constitute investment advice, an offer, or a solicitation to buy or sell any securities or investment products. Readers should consult with a qualified financial adviser before making any investment decisions.
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