Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Wealthy investors who ploughed hundreds of billions of dollars into private credit are pulling back, cutting off a key source of funds that investment giants including Blackstone, Blue Owl and Ares Management have used to fuel their growth.
New commitments to so-called non-traded business development companies — the fast-growing funds targeted at retail and wealthy individuals — slid 40 per cent to $3.2bn in January compared with December, according to investment bank RA Stanger.
The slump in fundraising is likely to pose an important test for an industry invested in loans that rarely or never trade, with executives telling the FT they believe that outflows could soon begin to overwhelm the volume of inflows to some of the largest funds.
It would mark a significant shift for the funds, which typically let investors redeem 5 per cent of the net assets of a vehicle each quarter. Funds in the fourth quarter were largely able to meet withdrawal requests with new commitments from other wealth management clients, limiting their need to draw on other sources of cash to pay exiting investors.
The decision by Blue Owl to permanently halt redemptions at one of its non-traded funds this month is expected to damp retail demand, with investment advisers saying they are struggling to defend the asset class to weary clients.
Writedowns at several funds, including publicly traded vehicles managed by KKR, Apollo Global Management and BlackRock, have added further scrutiny to an asset class facing waning investor appetite as the Federal Reserve cut interest rates and defaults began creeping up.
This “will really freeze the retail channel”, said the head of one private credit firm. “I think you’ll have really high bars to invest. This will put a headwind on the retail channel — not just for Blue Owl, but for everyone.”
Patrick Dwyer, a wealth adviser for NewEdge Wealth in Miami, said he had been fielding questions from clients all week about the broader industry after Blue Owl halted redemptions on one private credit fund.
While he thought investors should still hold private credit, he warned it was not for everyone: “Private credit is an illiquid asset class, and it is only appropriate for investors who can genuinely tolerate that illiquidity.”
Executives across the wealth management industry see parallels with their experience in 2022, when Blackstone’s Breit property fund limited withdrawals following heavy redemptions.
The fund, which ultimately navigated the market turmoil and last year posted strong returns, came to symbolise the stress a semi-liquid fund could face when retail investors raced for the exit.
Sales of similar real estate funds slowed as investors awaited a turn in the property market, with some expressing frustration at the gates and others moving to redeem as they saw a queue growing for the exit.
One portfolio strategist at a large asset manager asked: “Is this about to do to non-traded BDCs [business development companies] what Breit did to non-traded Reits, where all the kerfuffle and news causes people to say ‘I’m not touching this with a 10ft pole’?”
Investors have been closely following monthly disclosures for indications of investor demand as they await the results of quarterly redemptions in the weeks ahead.
An FT review showed that sales had decelerated at most funds in January and February. The figures provide a partial glimpse of activity as they do not include reinvested dividends, which funnel billions of dollars into the vehicles each year.
Blackstone’s flagship $82.5bn flagship fund, known as Bcred, reported about $1.1bn of sales in the first two months of 2026. In contrast, the fund drew in more than $1bn a month on average last year.
Analysts are weighing those results against the $2.1bn of redemptions Bcred reported in the fourth quarter.
Apollo’s $25.1bn fund, Apollo Debt Solutions, disclosed about $150mn of sales in February, 72 per cent below its average monthly pace last year. Sales have also slowed at private credit funds managed by BlackRock’s HPS Investment Partners, Ares and Blue Owl.
Executives said they had ample sources of liquidity in the event redemptions remain elevated, pointing to bank credit lines and portfolios of liquid loans they could sell to raise cash. Funds managed by Blue Owl and investment firm New Mountain Capital both sold loan portfolios this month to bolster their financial positions.
The firms declined to comment.