Big investors are trading private credit gains for infrastructure bets. Here's where else they're putting money.

Institutional investors are shifting their focus from private credit to infrastructure, according to a new report by Canoe Intelligence. Learn more about this trend and where other asset classes are seeing growth.

Private credit, once a popular investment choice for institutional investors, is losing ground as it accounts for only 6.8% of alternative-asset holdings in the fourth quarter of 2025, down from 9.7% in December 2024. Despite this decline, private credit's net asset value increased by roughly 20% from June 2024, according to Canoe Intelligence. The report, based on primary documents across 44,000 funds with $11 trillion in assets under management (AUM), tracks the inflows and outflows of money between institutions and alternative investors.

Private credit's share of institutional portfolios has shrunk due to investors receiving repayments and distributions from loans. "The asset class is doing exactly what it should be doing," said Mike Muniz, chief strategy officer at Canoe Intelligence. However, new investments in private credit are not keeping pace with these distributions, indicating that institutional investors may not be rushing to redeploy their funds.

Some institutions have reduced or reassessed their investments in private credit retail funds due to record redemptions and concerns about the performance of private credit. In contrast, institutional investors are choosing to put their gains elsewhere. "This is not a sign of abandoning the asset class but suggests a degree of selectivity," Muniz noted.

The data shows an increasing preference for larger players in the industry. The 50 biggest managers by AUM accounted for 51% of investor net value in the fourth quarter, up from 45% in the previous quarter. This trend continued into the first quarter of this year, with large players like Blackstone reporting near-record private credit fundraising.

Infrastructure is another asset class seeing significant growth in institutional allocations. The only asset class to record net inflows was infrastructure, with $1.38 billion invested last quarter. Digital infrastructure, particularly through "core-plus" strategies that combine low-risk income-generating assets with smaller riskier investments, has driven this trend. Muniz attributes the steady capital flow to the popularity of data centers in this strategy.

Other asset classes also saw growth in institutional allocations. Hedge funds increased from 15% to 22%, overtaking private credit for the first time in Canoe's dataset. Venture capital experienced a similar shift, with investors making "vintage-year" decisions based on current startup market opportunities.

Muniz emphasizes that while the data cannot conclusively tie individual assets to these trends, the pattern of steady capital flow indicates significant movement towards infrastructure and venture capital investments. He predicts that institutional allocators are leaning in rather than pulling back from these areas.

In summary, as private credit loses its prominence among institutional investors, a shift is occurring towards more stable and potentially lucrative asset classes like infrastructure and venture capital.