Cliffwater Direct Lending Index Shows Strong Mid-Year Performance Amid Scrutiny
The Cliffwater Direct Lending Index (CDLI) has demonstrated resilience in the first half of 2026, returning 3.0% for the six-month period and 7.7% year-to-date as of June 30, outperforming major fixed income indices. The index's performance highlights its long-term stability with an average annual return of 9.5% over nearly two decades, including only one negative year in 2008. Key metrics such as non-accruals and PIK (Payment-In-Kind) income remain stable below historical averages, while interest coverage ratios have improved. The index's $553 billion portfolio of private loans shows little sign of deterioration, with realized losses at half their long-term average and loan prices closely aligned to public counterparts. Although first-quarter markdowns in software-related loans affected returns slightly, second-quarter adjustments were minimal, suggesting AI-driven risks are already reflected in valuations. Credit spreads have widened for the first time in three years, but non-interest cash flows remain robust enough to meet liquidity needs. Stephen Nesbitt, CEO of Cliffwater and creator of CDLI, emphasized that private credit remains a reliable 'all-weather' asset class despite ongoing public concerns.
Topics: fixed income indices performance data private credit