Investors don't know how to spend the $240 billion that's recently poured into private credit funds — but a top JPMorgan executive has 3 big ideas

Investors poured $110 billion into private credit funds last year, and now, managers are struggling to find ways to put all that money to work. JPMorgan Alternative's managing partner picked out three areas that still have value: short-term mega-deal financing, litigation finance, and catastrophe insurance. All of those areas “are moving on their own trajectory, separate from the broader credit markets,” Anton Pil said. Investors love private credit: 2018 saw a near-record year of fundraising, second only to 2017's peak of $129 billion. But as more money enters the space, managers are struggling to find enough ways to put all that capital to work. “There‘s only a handful of opportunities left in private credit that I’d argue still have value today,” Anton Pil, JPMorgan Alternatives' managing partner, said at a media event on Wednesday. Sign up here for our weekly newsletter Wall Street Insider, a behind-the-scenes look at the stories dominating banking, business, and big deals.He picked out three “idiosyncratic” investment areas: short-term mega-deal finance; litigation finance; and catastrophe insurance, which picked up after the California wildfires last year. Litigation finance is the practice by which investors help fund plaintiffs in a lawsuit in return for a cut of payouts they may get from the proceedings. The best known example is perhaps tech billionaire Peter Thiel's backing of Hulk Hogan's lawsuit against Gawker, which ended in the closure of the digital media company — and a black eye for the emerging industry.See more: This startup just got $114 million to help people get ‘a better deal from the justice system’ by finding investors for their lawsuits“Those things are moving on their own trajectory, separate from the broader credit markets,” Pil said. “The more traditional private credit markets, we‘re rapidly shifting gears to much more special situations and distressed, so we're preparing for the end of the cycle. It’s inevitable.” Private credit fundraising jumped from $77 billion in 2013 to $110 billion in 2018, according to JPMorgan. Read more:Marathon, one of the world's largest distressed-debt shops, has hired a 20-year Wall Street veteran as it readies for an impending recessionBond markets are sending an economic warning signal — here's when the next US recession may hitRetail defaults are at an all-time high