The problem w private credit (& private equity) valuations is that managers are charging management fees based on valuations that may not be independently determined or accurate. It would require an enormous amount of work to independently value a large PE or PC portfolio yet without such work (& the enormous expense that would involve) fund investors are vulnerable to overpaying management fees. Registered investment advisers are required to independently value non-publicly traded assets and so should be all firms that manage those types of assets. This presents an enormous challenge for regulators who face resistance to this from politically powerful PE firms but when the credit cycle turns down there will be a lot of conflict over this issue.
The problem w private credit (& private equity) valuations is that managers are charging management fees based on valuations that may not be independently determined or accurate. It would require an enormous amount of work to independently value a large PE or PC portfolio yet without such work (& the enormous expense that would involve) fund investors are vulnerable to overpaying management fees. Registered investment advisers are required to independently value non-publicly traded assets and so should be all firms that manage those types of assets. This presents an enormous challenge for regulators who face resistance to this from politically powerful PE firms but when the credit cycle turns down there will be a lot of conflict over this issue.