3 Lessons from the 2022–2024 Market Volatility That Prove Debt Funds Work

From the sharp downturn of 2022 to the inconsistent recovery across 2023 and 2024, the markets delivered a masterclass in volatility. Stocks dipped. Bonds cracked. Portfolios shook. And investors were reminded—sometimes painfully—that growth doesn’t always go in a straight line.

But while many were riding the rollercoaster, one strategy quietly delivered: conservative real estate debt funds.

At LBC Capital Income Fund, LLC, we stayed true to the model we’ve trusted for over 13 years—first-lien, short-term real estate loans, with no fund-level leverage and strict underwriting. And throughout the turbulence, our investors continued to receive predictable monthly income without a single missed distribution.

Here are 3 lessons from 2022–2024 that prove why our approach works.

1. Conservative Lending Wins When Markets Shake

When the S&P 500 dropped nearly 25% from its peak in early 2022 (Wikipedia), many portfolios took a hit. But debt funds like LBC Capital Income Fund, LLC held firm—not because we guessed right, but because we build for downside protection.

We lend at conservative 60–70% loan-to-value ratios, always in first-lien position, and only on deals that make sense on day one. We don’t rely on appreciation. We don’t take on speculative construction. And we never, ever chase high-risk yields.

That’s how we’ve maintained zero principal losses across multiple market cycles.

2. Monthly Income Matters More in Uncertain Markets

Between 2022 and 2024, equity markets were anything but consistent. Real estate investment trusts (REITs) slashed dividends, bond funds saw negative real returns, and many private equity deals paused distributions entirely.

Debt funds? They kept paying.

According to MSCI, European private real estate debt funds returned 3.8% in the 12 months ending Q3 2024—while equity funds struggled to regain footing.

At LBC Capital Income Fund, LLC, our investors received 8%–8.5% target annual returns, distributed monthly, even during the most volatile months. That income helped our clients hedge inflation, cover living expenses, and sleep a little better at night.

3. Diversification Isn’t Just a Buzzword—It’s Protection

In 2022, traditional 60/40 portfolios underperformed as both stocks and bonds declined simultaneously. The Bloomberg U.S. Aggregate Bond Index reported unprecedented monthly volatility, with average swings of 2% per month—nearly triple its historical average.

Investors who had diversified into non-correlated alternatives like private debt fared far better.

Why? Because debt funds operate independently of the public market’s mood swings. We don’t mark to market. Our loan book is real assets, real interest payments, real timelines.

At LBC Capital Income Fund, LLC, we’re not chasing headlines—we’re protecting capital and producing income. And when the world goes sideways, that starts to look really attractive.

What This Means for Accredited Investors in 2025 and Beyond

Market cycles come and go. What matters is how your strategy performs when it’s tested.

If you’re:

• Tired of inconsistent distributions from equity-focused investments
• Looking to reduce your portfolio’s exposure to public market swings
• Interested in steady income with conservative underwriting

…it may be time to consider a debt fund allocation.

LBC Capital Income Fund, LLC has delivered monthly income without missing a distribution—even through one of the most volatile multi-year periods in recent history.

You Don’t Have to Ride Every Market Wave

The past two years reminded all of us that volatility is the price of chasing growth. But what if you could grow your wealth without the whiplash?

Debt funds—when structured with discipline and experience—offer a path to do exactly that.

At LBC Capital Income Fund, LLC, we’ve helped accredited investors earn strong, stable returns for over a decade. Our model didn’t bend in 2022. It didn’t break in 2023. And it stood strong through 2024.

Want a strategy that delivers through the storm, not just in fair weather? Let’s talk.