Private Credit vs Public Equities in 2026: A Halal Income Allocation for US Investors
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Uzair Ali
Investment Manager
June 17, 2026
For much of the last decade, many US investors did not have to think deeply about income. Public equities did most of the heavy lifting, cash yielded very little, and fixed income was often treated as a defensive allocation rather than a meaningful source of return.
That world has changed. Inflation has reappeared as a live portfolio risk. The US Consumer Price Index rose 4.2% in the year to May 2026, with energy prices doing much of the damage. Core inflation was lower, but still above the Federal Reserve’s 2% long-term objective. The Fed has kept policy restrictive and has described inflation as elevated.
This matters because the investor’s problem is no longer simply where to find return. It is where to find return after inflation, after tax, after liquidity constraints and after Sharia screening.
For Muslim investors in the US, the traditional menu remains narrow. Conventional bonds are generally not acceptable. Bank deposits and money-market funds may help with liquidity, but they rarely build wealth after inflation and tax. Public Sharia-compliant equities provide long-term growth, but they can be volatile and are not designed to provide predictable income. Real estate can generate income, but it brings concentration, leverage, maintenance and exit risk.
Private credit deserves attention because it can sit between these categories. Used correctly, it can provide contracted or asset-backed income, diversification away from listed equities, and exposure to real economic activity. Used poorly, it can become an illiquid substitute for cash, which it is not.
The right question is therefore not whether private credit is good or bad. The right question is where it belongs in a modern halal portfolio.
Private credit is financing provided directly to companies, consumers, projects or asset-backed structures outside the public bond market. In conventional markets, it has grown rapidly as banks have pulled back from parts of the lending market and private funds have stepped in to provide capital.
In a Sharia-compliant context, the structure must be different from a conventional interest-bearing loan. The financing needs to be connected to real assets, trade, services, leasing, partnership economics or other permissible commercial activity. Depending on the transaction, that may involve structures such as murabaha, ijara, wakala, musharaka or other approved arrangements.
The important point is that Sharia compliance changes the structure and the source of return. Investors still need to assess the underlying obligor, collateral, cash flows, documentation, diversification, servicing process and manager discipline.
The current environment has made income more valuable. Cash yields are no longer zero, but inflation has also risen. Treasuries offer liquidity and credit quality, but they do not provide Sharia-compliant income for most Muslim investors. Public sukuk are more suitable from a Sharia perspective, but many investors still face limited access, duration risk, currency exposure and lower yields than private opportunities.
Private credit can be attractive because the return is usually driven by negotiated financing terms rather than public market sentiment. The premium exists because investors are accepting illiquidity, complexity, manager selection risk and direct exposure to borrower performance. Those are real risks. They are also the reason the asset class can offer returns above many public income alternatives.
For US investors today, three features are particularly relevant.
First, private credit can reduce dependence on listed equities. Many halal portfolios are heavily tilted towards public equities because the fixed-income universe is constrained. That can be fine for long-term growth, but it leaves investors exposed to valuation swings in a small number of sectors. A private credit allocation can introduce a different return driver.
Second, private credit can help with income planning. Distributions are not guaranteed, but a professionally managed portfolio of financing assets can be designed around periodic income in a way that venture capital, public equities and most direct real estate cannot.
Third, private credit can be built around real economy use cases. Working capital, trade finance, asset-backed consumer finance, leasing and secured business finance are all closer to the productive economy than a purely speculative trade in listed securities.
The trade-off is clear. Investors give up daily liquidity and accept credit underwriting risk in exchange for a potential income premium and portfolio diversification.
| Option | Main role | What works | What to watch |
| Cash and money-market funds | Liquidity and capital parking | Accessible, low volatility, useful for emergency reserves and near-term commitments. | Returns can be eroded by inflation and tax. Not a long-term wealth-building allocation. |
| Treasuries and conventional bonds | Defensive income and duration exposure | Deep markets, high liquidity, transparent pricing and strong role in conventional portfolios. | Not generally suitable for Sharia-conscious investors. Bond prices can fall when rates rise. |
| Public sukuk | Sharia-compliant public fixed income | More liquid than private markets and often issued by sovereigns or large institutions. | Limited availability for many individual US investors. Yields may be lower and duration risk remains. |
| Public Sharia-compliant equities | Long-term growth | Liquid, scalable and globally diversified through screened equity strategies. | Volatile and not designed to provide steady income. Many portfolios become concentrated in growth and technology exposure. |
| Real estate | Income, inflation linkage and tangible assets | Can provide rental income and long-term asset ownership. | Illiquid, operationally intensive and often concentrated by geography, sector and leverage. |
| Private equity and venture capital | Long-term growth and upside | Potential for high returns through business ownership. | High risk, long duration, limited income and limited liquidity. Not suitable for capital needed in the near term. |
| Private credit | Income and portfolio diversification | Potential income premium, negotiated downside protections, asset-backed structures and lower correlation to public equities. | Capital is at risk. Liquidity is limited. Outcomes depend heavily on manager selection, underwriting and servicing. |
Private credit should usually sit in the income and preservation layer of a portfolio, not in the emergency cash layer and not in the speculative growth layer. Money needed for tax payments, family expenses, a home purchase or near-term school fees should not be placed into an illiquid private market product. Private credit is more appropriate for capital that can be invested for a defined period and where the investor can tolerate delayed redemptions, changes in distributions or potential loss.
For a US Muslim investor, a practical portfolio might have four layers:
Private credit should be judged less by headline yield and more by the quality of the underwriting. A high target return is not impressive if it is being achieved through weak documentation, poor collateral, aggressive leverage or exposure to borrowers that cannot withstand stress.
A serious diligence process should ask the following:
US investors face an additional layer of complexity when investing internationally. The issue is not only whether an investment is attractive before tax. It is whether the structure works within the US tax system.
PFIC treatment is a particular concern for US taxpayers investing into non-US funds and investment companies. If an overseas investment is treated as a PFIC, the tax and reporting consequences can be punitive. Tax classification should be checked before capital is committed. The Cur8 USD Income Fund, by example, is classified as Non-PFIC, thus avoiding punitive tax treatment. Read more on this here.
This is one reason the structure of private market investments matters. A compelling gross return can be weakened materially by inefficient tax treatment, poor reporting or a mismatch between the investor’s domicile and the fund’s legal form.
US investors should therefore review three points before investing: whether they are eligible to invest, whether the investment is suitable for their liquidity and risk profile, and whether their tax adviser is comfortable with the tax treatment.
Private credit also has a second-order effect that is easy to miss if it is viewed only as an income product. In underbuilt markets, stable funding can help build the rails of an ecosystem.
In halal finance, Muslim consumers and businesses often face fewer providers, narrower product choice and less competitive pricing than the conventional market. Providers need reliable funding lines before they can scale, compete and bring faith-aligned financial products closer to the mainstream.
This is the same broader vision behind Cur8 Capital’s income strategies. The original GBP Income Fund helped support the development of Islamic home finance in the UK by providing capital to a market that remains structurally underserved. That market has since begun to connect more meaningfully with institutional capital, including through public securitization of Sharia-compliant Home Purchase Plan assets. The direction of travel is important: when halal finance providers gain access to deeper pools of capital, they can serve more customers and build more resilient businesses.
For US investors, the USD Income Fund applies that same principle through a portfolio designed around income, asset backing and disciplined underwriting. A core example is Faes & Co, which anchors part of the Fund’s exposure to US real estate through asset-backed property financing. The manager has operated across market cycles and focuses on secured opportunities where the financing is connected to real assets, rather than speculative growth.
The opportunity supports a more mature halal financing ecosystem while remaining focused on the fundamentals US investors rightly care about: jurisdiction, asset security, manager quality, liquidity profile and risk-adjusted return.
The lesson is broader than any single transaction. When private capital is deployed well, it can do more than generate income. It can help faith-aligned finance providers serve more customers, deepen the market and reduce the long-term cost of halal financial products for Muslim communities.
The fund is designed to provide access to asset-backed USD-denominated private credit across areas such as ethical consumer finance, growth and working capital finance, trade finance, money-market style instruments and sukuk. The Fund targets 9% per annum, paid semi-annually, and has met its target profit at every distribution to date. It currently has approximately $35m in assets under management.
For US investors, one of the key attractions is that the strategy is tied to real economic activity rather than financial speculation. Sharia compliance bars the Fund from investing in speculative or prohibited activities, and the underwriting focuses on cash flow, asset backing and hard asset value. This is particularly relevant in an inflationary environment, where investors are looking for income strategies connected to productive assets and real-world financing needs.
Faes & Co is a good example of this approach within the Fund. It anchors part of the Fund’s exposure to US real estate through disciplined asset-backed property financing. The focus is on secured lending against real assets, supported by a manager with a consistent operating history across market cycles. For US investors who may be cautious about non-US or frontier-market exposure, this illustrates how the Fund can provide access to Sharia-compliant private credit through familiar, asset-backed US opportunities.
For US investors, Cur8 Capital does not actively market in the US, but accredited US-based investors who onboard with Cur8 are welcome to invest. The USD Income Fund has been classified as Non-PFIC following independent US tax advice. Read more on this here. Investors should still take their own tax advice before investing.
The fund should not be presented as a cash substitute. It is private credit. Capital is at risk, target returns are not guaranteed and liquidity is not the same as a bank account or public market instrument. Its role is narrower and more useful than that: a potential income allocation for investors who want USD-denominated Sharia-compliant private market exposure, while also helping build the ecosystem of halal financing in the real economy.
If you are a US-based professional or business owner with $100,000 or more to deploy, you can book in a call with our investment team here.
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Private credit addresses a genuine problem for Muslim investors: the shortage of credible Sharia-compliant income options between cash, public equities and direct property.
In the current environment, that matters as inflation is still above target, cash yields may not protect purchasing power after tax, and many halal portfolios remain overly dependent on public equities and real estate. Private credit can help fill the income layer of the portfolio, provided it is sized properly and underwritten carefully.
For sophisticated US investors, the case for Private Credit over public equities is that it can provide a different type of return: USD-based, income-oriented, linked to real economic activity, less dependent on public market valuations and, when deployed well, supportive of the wider halal finance ecosystem.
This article is for information purposes only and does not constitute investment, tax, legal or financial advice, or an offer to sell securities in any jurisdiction. Capital is at risk. Target returns are targets only and are not guaranteed. Private market investments can be illiquid and may not be suitable for all investors. Past performance and market index data are not reliable indicators of future results. US persons should consult their own tax advisers before investing.