Credit where it's due. Investors Down Under have just given a wake-up call to one of the financial industry's hottest products. On Tuesday top executives from Blackstone, BlackRock and Apollo Global Management wooed Australia's A$3.7 trillion ($2.4 trillion) pension fund industry at an event in Melbourne. But the lukewarm response to the latter's pitch on private credit is a reminder that the appeal of direct lending has its limits.

Making clients of superannuation funds, as retirement savings are called Down Under, is a top priority for money managers worldwide. Not only do they collectively constitute the fourth-largest pool of retirement savings on the planet, they're also growing fast courtesy of employer contributions in excess of 10% of workers' income. BlackRock CEO Larry Fink singled out the system for praise in his annual letter last month - and the company's president, Robert Kapito, was on site on Tuesday to reinforce the message.

Blackstone boss Steve Schwarzman made an appearance too, discussing China and artificial intelligence, among other things, though only via video conference. Apollo President Jim Zelter tried turning that into a small competitive edge, noting as he took to the podium right after his rival that "It's great to be here actually in person".

Zelter's main goal, though, was to sell the audience on the appeal of private credit, which too many regard as just offering loans to financial sponsors and middle-market companies - a roughly $1.5 trillion addressable market. That really ought to be $40 trillion, he argued, as regulation, balance sheet issues and cost of capital make it harder for banks to lend.

Those are all good points. And his fellow panellists, including investment chiefs from top 10 super funds Unisuper and Hesta, outlined how they were already players in the market. But they also noted that the current attractive returns are unlikely to last, whether due to more competitors entering the market, interest rates falling, or defaults rising.

That doesn't mean they're about to shun the market entirely. The country's largest pension fund, AustralianSuper, for example, intends to triple its $4.5 billion investment in private credit in the coming years - but is unlikely to account for much more than 5% of its total assets.

That's the drawback of chasing long-term investors for capital: the smarter ones can keep any short-term appeal in perspective.

Blackstone boss Steve Schwarzman made an appearance discussing China and artificial intelligence.

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