Ares fund caps withdrawals amid surge in investor redemption requests

Ares Management has implemented withdrawal caps on its Ares Strategic Income Fund, a flagship private credit vehicle, due to a substantial increase in investor redemption requests. In the second quarter, these requests reached 14.4% of the fund's shares, with investors aiming to pull out $1.5 billion. This marks a notable rise from the 11.6% of shares requested for redemption in the prior quarter. The majority of these withdrawal requests were concentrated among a small number of non-U.S. institutional investors and family offices.

In parallel, Swiss asset manager Partners Group is contemplating a potential reduction in the size of its evergreen funds. Chairman Steffen Meister indicated this possibility while emphasizing that the company's overall strategy would remain unchanged. This consideration follows a recent decision by Partners Group to cap withdrawals from an open-ended private equity fund. That move led to a significant decline in the fund's share price, highlighting investor concerns about liquidity in private markets.

The actions by Ares Management and Partners Group underscore growing investor apprehension regarding liquidity in private credit and private equity markets. As interest rates rise and economic uncertainty persists, investors are increasingly seeking to access their capital, putting pressure on funds that often have illiquid underlying assets. The concentration of redemption requests at Ares, specifically from non-U.S. institutions and family offices, suggests that certain investor segments may be more sensitive to market conditions or have different liquidity needs.