Private credit funds see redemption pressure ease as retail withdrawals slow

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Private credit redemption eases

Highlights

Apollo Global, Ares, and BlackRock saw Q3 redemption requests on flagship private credit funds fall to 14.7%, 13.1%, and 11.5% respectively, while Blackstone held steady at 10%.
All four major funds have capped redemptions at 5% of value as of Q2 2026, meeting less than half of current withdrawal requests and tempering sector growth momentum.
Despite slowed outflows, management and performance fees remain under pressure, with large asset managers facing subdued new inflows and elevated uncertainty over future fee income.

September figures point to slower outflows

As reported by Financial Times, flagship private credit funds for individual investors managed by Apollo Global, Ares and BlackRock are reporting lower redemption requests, while Blackstone's main vehicle is holding steady, indicating that investor concern over rising corporate defaults is starting to ease.

The Ares Strategic Income Fund says it received withdrawal requests for 13.1 per cent of shares in the third quarter, down from 14.4 per cent in the previous quarter. At Apollo's $15 billion flagship debt fund, withdrawal requests fell to 14.7 per cent from 16.8 per cent. BlackRock's HPS corporate lending fund says redemption requests declined from 13.3 per cent to 11.5 per cent, while Blackstone's $43 billion flagship private credit vehicle says requests remained steady at about 10 per cent.

Performance across the four funds has also improved in recent months after a difficult start to the year, though private credit is still underperforming the broader debt market this year, according to PitchBook data. Peter Troisi, an analyst at Barclays, says it is too early to call a bottom in redemptions, even if the overall trend is moving lower.

Fee growth remains under pressure

Investors seeking to reduce their exposure are still facing delays in withdrawing money, with the funds meeting on average less than half of redemption requests and reporting subdued demand for fresh investment. By the second quarter of 2026, all four funds had capped redemptions at 5 per cent of their value, reversing momentum in a sector that had delivered years of rapid growth for private capital groups.

Business development companies and interval funds remain the main channels through which retail and high-net-worth investors access the $2.3 trillion private credit industry. The 13 non-traded BDCs that have so far reported third-quarter figures posted a combined $9.6 billion in redemption requests, equal to 10.1 per cent of fund value, down from 11.2 per cent in the previous quarter, according to RA Stanger.

Even with conditions improving, earnings pressure is likely to persist for large asset managers. Management fees are unlikely to rise meaningfully, and firms are also set to miss out on lucrative performance fees this year, adding to uncertainty over future fee income across the private capital sector.

In our earlier article on the surge in the 10-year U.S. Treasury yield above 5.2%, we explained what was driving the jump in yields and why rapid moves in government bonds can spill over into broader markets. We also noted that higher yields can tighten financial conditions by lifting borrowing costs for households and companies, increasing pressure on corporate credit and other risk assets.

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