Episode summary
How Oaktree Is Positioning $223 Billion for a Credit Cycle Shift
How I Invest With David Weisburd
· · 22 min · Hosts: David Weisburd · Guests: Danielle Poli
Summary
Danielle Poli says Oaktree’s Global Credit strategy is built to give clients one-stop access to the firm’s credit platform, with a diversified mix of core income and higher-conviction alpha ideas. She describes the process as highly collaborative and relative-value driven, with weekly committee discussions focused on where a dollar should be deployed across bonds, loans, structured credit, real estate debt, emerging markets, and convertibles.
Her view is that today’s market calls for caution. Rising rates, heavy refinancing needs, and what she sees as too much capital chasing too few deals have loosened lending standards, while AI uncertainty has made Oaktree strategically underweight software. At the same time, she thinks disrupted areas can create opportunity, especially in cybersecurity and beaten-up sectors like chemicals, where fundamentals remain intact.
Poli also argues that private credit must compensate investors for illiquidity, and that the best times to deploy are periods of dislocation, when terms improve and protections like covenants matter more. Across the interview, she frames Oaktree’s edge as risk control, bottom-up underwriting, and flexibility across public and private credit.
Key takeaways
- Danielle Poli says Oaktree’s Global Credit fund is designed as a “core plus alpha” portfolio that rotates among bonds, loans, structured credit, real estate debt, emerging markets, and convertibles.
- Poli says leverage, free cash flow, capex, and refinancing pressure matter more than macro forecasts when judging borrower risk.
- Oaktree is strategically underweight software because Poli sees AI as an unresolved credit risk, while cybersecurity may benefit from more demand for protection.
- Poli says private credit should offer excess spread for illiquidity, and that parts of asset-backed finance can still offer 200 to 600 basis points of excess spread.
- Poli says Oaktree’s best results come during dislocations, when the firm can buy more defensively and negotiate better terms and covenants.
Notable quotes
“Global Credit is really meant to provide our clients one-stop access to Oak Tree's credit platform focused on income, total return in a diversified portfolio”
“It's less about the macro and more about individual investments um and themes that play through our portfolio”
“Risk control is the number one tenant and that's our focus on avoiding defaults”
“I think you should be paid to give up liquidity. And so private credit should offer you excess yield, excess spread”
“AI is evolving. It's still unknown. We're seeing rapid advancements. It's one of the reasons why we've approached the space very conservatively”
How the episode opens
Danielle, you're co-portfolio manager of global credit at Oakree, which has $223 billion. Tell me about Global Credit. What is the strategy?
Global Credit is really meant to provide our clients one-stop access to Oak Tree's credit platform focused on income, total return in a diversified portfolio of our highest conviction opportunities. So Oak Tree was founded in 1995 and the founding strategies at the firm were high yield and distressed and over the years we did stepouts in areas like private credit um leverage loans CLLOs's and so we have a lot of different strategies and what we found is that our clients on average are invested maybe in four strategies some wanted us to be more strategic and think about allocating among those strategies as we saw shifting relative value and so since the firm's founding we've been doing this kind of on a one-off basis more fund to funds but it really in 2017 with Bruce Kh's guidance that I and others with him created global credit as a single fund opportunity to participate in multiple credit strategies and benefit from our views on relative value.
And you have the fun job of basically figuring out what's the best relative investment. So you get to go across multiple asset classes. How do you figure out which part of credit or fixed income is most opportunity? — It's a really fun job working with so many people at Oakria. It takes a village and we're really relying on our portfolio managers expertise across these different strategies to help us focus on those high conviction ideas. We get together on Tuesday mornings 8 a.m. and we go around the table and we ask everyone what would you do with the dollar on the table? What would you buy?
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- credit cycle shift
- core plus alpha strategy
- credit underwriting
- ai and credit risk
- private vs public credit
Companies and tickers mentioned
- Oaktree Capital Management
Watch the episode
Watch “How Oaktree Is Positioning $223 Billion for a Credit Cycle Shift” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
More from How I Invest With David Weisburd
-
Hunter Walk: Why Venture is Getting Harder, Picking Great Founders, and Investing Against Consensus -
True Anomaly’s Even Rogers on Space Warfare, China’s Military Advantage, and the Defense Tech Boom -
Finding the Next Anthropic, Quantifying Venture Capital, and the Science of Picking Winners -
Why 95% of AI Projects Fail, Anthropic still at $2T?, and Why AI Is Still in the First Inning -
Peter Thiel's 27-Year Partner on the AI Bubble, the Venture Capital Crisis, and the PayPal Mafia -
Why Venture Is Eating Public Markets, Picking Great VCs, and the AI Boom w/Brijesh Jeevarathnam
How I Invest With David Weisburd, this episode and its artwork belong to David Weisburd. Octagon is not affiliated with the show; this page is an independent summary.
