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Chart of the Month
Upper Middle Market lending can provide more attractive risk-adjusted returns
Historic Direct Lending Market Default Rates vs. UMM Default Rates1
Past performance is not a guarantee of future results. This is for illustrative and informational purposes only. All investments involve risk of loss, including loss of principal invested. There can be no assurance that historical trends will continue during the life of any fund. The views expressed are Blue Owl views and subject to change without notice as market and other conditions change. 1. Source: Proskauer Private Credit Default Index. UMM defined by Proskauer as companies with EBITDA greater than $50mn. Data through March 31, 2025.
Loans to smaller companies in the Lower Middle Market (LMM) were once expected to offer higher returns due to their risk profiles. However, current data shows that pricing for sponsor-backed, first lien loans is now similar across the Lower, Middle, and Upper segments. This suggests that competition has reduced the premium once associated with LMM lending.
At the same time, the Upper Middle Market (UMM) has shown resilience. Larger companies in this segment have lower default rates and more stable credit profiles compared to the overall market. With loan pricing now comparable to smaller borrowers, UMM lending offers a more attractive balance of risk and return for investors across market cycles.
Explore this CIO perspective on investing in Private Markets
In this edition of Partner Perspectives, Madeleine Sinclair, Head of Private Wealth North America at Blue Owl Capital, joins Scott Welch, CIO at Certuity, for a compelling conversation on the evolving role of alternative investments in wealth management. Drawing from his extensive experience advising ultra-high-net-worth families, Scott shares how strategic allocations to private markets can enhance diversification and long-term performance. He also discusses the increasing accessibility of alternatives and emphasizes the importance of selecting top-tier managers in today’s competitive landscape.
Continuing Education: Private Real Estate & Triple Net Lease
Blue Owl is proud to present Introduction to Private Real Estate & Triple Net Lease, a CFP Board and IWI-accredited continuing education program designed to deepen understanding of private real estate investing. This course introduces the fundamentals of private real estate, explores key investment strategies, and compares historical performance against public market counterparts.
The program also covers sale-leaseback transactions, highlighting benefits for both investors and tenants, and examines how evolving fund structures are expanding access to private real estate for wealth investors.
Asset-Based Finance joins the Private Wealth conversation
Asset-Based Finance (ABF) is quickly gaining momentum as a differentiated strategy within private credit. Unlike traditional corporate lending, ABF generates income from pools of collateral-backed assets that support everyday economic activity. As banks continue to pull back from lending, ABF is stepping in to provide essential funding across the real economy.
Blue Owl is committed to expanding access to asset-based finance investment opportunities for investors. For advisors and their clients, this means diversified, income-focused strategies designed to perform across a range of market conditions.
FOR FINANCIAL PROFESSIONAL USE ONLY. NOT FOR USE WITH CLIENTS OR THE GENERAL PUBLIC.
This communication is for informational purposes only and is not an offer or a solicitation to sell or subscribe for any fund and does not constitute investment, legal, regulatory, business, tax, financial, accounting or other advice or a recommendation regarding Blue Owl Capital Inc. (“Blue Owl”), its affiliates and investment program, funds sponsored by Blue Owl, including the Blue Owl Credit, GP Strategic Capital Funds and the Real Assets Funds (collectively the “Blue Owl Funds”) as well as investment held by the Blue Owl Funds. The information provided herein is not directed at any particular investor or category of investors and is provided solely as general information about Blue Owl products and services to regulated financial intermediaries and to otherwise provide general investment education. No information contained herein should be regarded as a suggestion to engage in or refrain from any investment-related course of action. All investments are subject to risk, including the loss of the principal amount invested, as well as substantial fees and costs, all of which can impact an investor’s return. Within the United States and Canada, securities are offered through Blue Owl Securities LLC, member of FINRA/SIPC, as Dealer Manager.
