In this video, Dianna Carr-Coletta, Managing Director and Partner within PGIM’s Alternatives Direct Lending Group, explains the three key pillars on which PGIM believes that portfolio resilience should be built.
#1 Back to Basics: Strategic Diversification
The first pillar demands that a portfolio is properly diversified in terms of sectors, geographies, and individual credits within each sector. All sectors suffer stress over time, she explains, and private credit portfolios, which are long-term by nature, require a diversified structure to better withstand inevitable buffeting over time.
#2 Underwriting for the Cycle: Cash Flow Sustainability
The second pillar focuses on the underwriting discipline that is applied to the entire portfolio. PGIM stress-tests the capital structure of every company in which it invests to ensure the company can navigate an entire credit cycle. Each company must show it can continue to service its debt even if its earnings decline by as much as 50% during any year of that cycle to be accepted by PGIM’s investment committee.
#3 Portfolio Resilience: Structure, Terms & Experience
The third pillar is hard-won: experience. “Investing is an apprenticeship and you have to learn through experience,” Carr-Coletta says. How much experience? PGIM suggests that the answer should be measured in “decades,” meaning a manager needs to build knowledge over multiple cycles.
In partnership with Asian Private Banker – The APB Private Credit Forum: 2026 Reality Check
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