It's an interesting question. There are several 'private credit'...

It's an interesting question. There are several 'private credit' LITs out in the market and a slew of others in the pipeline looking to list. IMO, private credit is a very credible alternative to traditional fixed income fund strategies, being government and corporate bonds. However, obviously, their higher returns come with higher risks. So, it depends on who you are looking at. As of right now, we have MXT, MOT and QRI on the ASX (noting that PCI, NBI and GCI are not private credit).

Fundamentally, all these products are an alternative form of fixed income, designed to be capital stable with the bulk of returns driven by distributions. MOT is somewhat of an exception due to how they invest, it will be the most 'equity-like' in its returns and volatility. But still very low vol compared to general equities.

The overriding risk to all of them is the quality of the lending process and resulting loan quality. This is not an area where you want amateurs, particularly now. Asset prices in many areas of the market are elevated. Lending on a high quality asset is one thing, but if it turns into a low quality asset, you can start to get equity like losses quickly. Personally, I consider the team at Metrics (MXT/MOT), to be the highest quality. The principals are all former NAB bankers who have worked together previously and have extensive expertise. These are the guys you want in your corner if a deal goes bad. The QRI team are OK, they spend a lot of time worrying about who they are lending too. But I don't put them in the same league as Metrics.

As to how stable these LITs are, I would expect NAV to be quite stable. But if you start to get impaired loans, watch out. The riskiness (from least to worst IMO) is MXT, MOT, QRI

The choice to go LITs vs LICs for fixed income products comes down mostly to the asset class. As fixed income distributions are fairly consistent, there is no real need to go down the company structure of a LIC and reserve earnings (which is useful for higher volatility asset classes like equities). Also, fixed income obviously doesn't carry franking, so no real advantage to go LIC there either. So a LIT tends to be a bit simpler and cheaper (paying the Responsible Entity of a trust is cheaper than paying a company board if your LIT is small).

Overall, I like the concept of these if fixed income is what you are after. If MOT and QRI ever get sold off to a discount, I'm going to dive in.

Hope this helps.