548 Private Credit - Picking Mutual Funds - DAF Donor Advised Funds

April 8, 2026·1 hr 7 min·5 clips

Private credit exploded from $100 billion to $3 trillion in 18 years — but the fees are structured so the lenders profit whether your money grows or not, and you may not be able to get your money out when you want it.

1. The Phil Ferguson Show Episode 548, recorded in spring 2026, covers three personal finance topics: mutual fund picking, private credit, and donor advised funds. 2. Phil Ferguson is the host and financial advisor who runs the Polaris financial planning model for clients. 3. The episode opens with Ferguson noting market volatility in early 2026, referencing Trump initiating a military action and ongoing tariff concerns, while observing the market is nonetheless up since Trump's election. 4. Ferguson recommends four books in order: Richest Man in Babylon, A Random Walk Down Wall Street, Winning the Loser's Game, and Common Sense on Mutual Funds, with the fourth to be read as a textbook. 5. He cites Barton Malkiel, author of 'A Random Walk Down Wall Street,' who wrote that past mutual fund manager performance is 'essentially worthless in predicting future success,' with superior records occurring no more frequently than chance. 6. The mutual fund segment analyzes an email from a listener who picked their own portfolio and made 16% in 2025, which Ferguson says sounds good until compared to the Vanguard 2045 target-date fund at 19.99% and the S&P 500 at 17.88%. 7. Ferguson identifies four problems with the listener's portfolio: funds mixing stocks and bonds within a single fund, country-specific ETFs, currency-hedged international funds, and a long-short fund. 8. He argues that currency-hedged international funds reduce the diversification benefit of international investing, because in 2025 the weakening U.S. dollar amplified international returns for unhedged U.S. investors. 9. A long-short fund in the listener's portfolio currently holds a 175% short on U.S. stocks and averaged 11.3% over 10 years versus the total stock market's 13.55% — a 2.25% annual drag. 10. Ferguson explains that mutual fund expense ratios do not include transaction costs from options, puts, calls, and margin, so the effective cost may be 2-3% annually rather than the published 1%. 11. He argues that funds with high turnover generate more short-term capital gains, which are taxed at higher marginal rates than long-term gains from low-turnover index funds. 12. The private credit segment opens by explaining the 2008 origin: post-crisis banking regulations reduced lending to risky borrowers, creating demand for private lenders who raised capital from insurance companies and pension funds, then retail investors. 13. Private credit grew from $100 billion to $3 trillion over 18 years; Ferguson characterizes rapid industry growth alone as not evidence of investor returns. 14. Private credit funds promise 8-12% annual dividends with stable unit prices, but charge management fees of 1.5-2% plus 15-20% of upside — meaning the fund manager profits regardless of performance. 15. The core valuation problem: private credit lenders self-value their own loan portfolios without market pricing, so investors cannot independently verify reported values. 16. When interest rates rose, floating-rate borrowers faced 14-16% loan costs; some defaulted, and Blue Owl became unable to pay dividends for a full quarter in 2025. 17. Companies including Blue Owl, Apollo, Ares, KKR, and Blackstone have suspended or severely limited redemptions; investors seeking liquidity are selling on secondary markets at 20-40% discounts. 18. Ferguson distinguishes this from the 2008 financial crisis — smaller scale — but warns retail investors that the product was sold as low-risk and stable when it carries equity-level risk with worse liquidity. 19. The donor advised fund (DAF) segment is introduced for people giving $10,000-$20,000 annually who do not reach the itemized deduction threshold, with the idea of bunching multiple years of giving into one year for a larger deduction. 20. The episode's tone is conversational, blunt, and explicitly skeptical of financial products sold through advisors who benefit from commissions, with Ferguson repeatedly acknowledging the limits of his own expertise.

As heard by us

A skeptical look at market risk, mutual funds, and private credit.

This episode stays squarely in Phil Ferguson's lane: skepticism about investing. It opens with spring market swings, a stretch of losses, and those fast rebound days, then circles back to the same plain warning that nobody knows what comes next and most predictions are worth…

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Why you'd press play

You want a blunt read on private credit before you buy the pitch.

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