Apollo’s Rowan: With Lower Public Market Returns Ahead, Private Credit Allocations Will Rise

At the Morningstar Investment Conference in Chicago on June 26, 2025, Apollo Global Management Chief Executive Marc Rowan outlined a strategic shift in portfolio construction, arguing that traditional public market allocations face structural headwinds that will drive institutional and individual investors toward private credit. Rowan framed the opportunity as both straightforward and complex, presenting a valuation argument centered on three core investor questions: whether assets are attractively priced, whether interest rates will decline, and whether investment strategies developed over the past four decades remain viable.

Rowan's valuation assessment was unambiguous. He stated that public markets are expensive by any historical benchmark, with particular pressure in equity valuations and credit spreads for public fixed-income securities trading at generational tightness. This compression in public credit spreads leaves minimal room for additional return generation through traditional bond allocations. Simultaneously, Rowan dismissed the prospect of material interest rate declines, citing structural inflationary drivers including domestic tariffs, manufacturing policy shifts, immigration constraints, and elevated government debt levels. These factors collectively suggest that long-term nominal rates will remain elevated, reducing the appeal of duration-sensitive public bond investments.

Apollo's scale and positioning in this transition are substantial. The firm manages $785 billion in total assets, with more than $640 billion allocated to private credit strategies. To democratize access to this asset class for retail and smaller institutional investors, Apollo partnered with State Street Global Advisors to launch the SPDR SSGA IG Public & Private Credit ETF (PRIV), which blends investment-grade public bonds with private credit debt originated by Apollo. This vehicle represents the broader industry trend of packaging private market exposures into standardized, liquid-accessible formats.

Rowan's thesis hinges on the proposition that private credit's liquidity constraints justify higher return expectations, and that these excess returns provide genuine diversification benefits distinct from public fixed-income markets. As public market yields compress and equity valuations remain elevated, allocations to private credit markets are projected to increase structurally. This reallocation reflects not speculative appetite but a rational response to changing risk-return dynamics across public markets.