Key facts
- U.S. alternative asset manager shares fell premarket.
- Investors are awaiting Q2 redemption updates from non-traded private credit funds.
- Cliffwater's flagship private credit fund saw withdrawal requests worsen to 17% in Q2 from 14% in Q1.
- Wealthy individuals are seeking to pull money due to negative headlines and liquidity concerns.
- Partners Group is capping withdrawals from an $8.6 billion private equity fund.
Shares of U.S. alternative asset managers declined in premarket trading as investors anticipated second-quarter redemption updates from non-traded private credit funds. This follows a prior quarter where withdrawals surged amid concerns about liquidity in the rapidly expanding sector. Cliffwater was the first to report its Q2 redemptions, showing worsening withdrawal requests at its $31.3 billion flagship private credit fund, which rose to 17% from 14% in the first quarter. Wealthy individuals have been seeking to move their money out of private credit funds due to negative publicity, liquidity limitations, and worries about AI disrupting software firms. Analysts suggest the Cliffwater update could delay the sector's recovery beyond Labor Day, with potential for a slowdown to linger until year-end if subsequent updates do not show improvement. In the first quarter, redemption requests across U.S. non-traded private credit vehicles reached as high as 41%, leading most managers to enforce the typical 5% limit on withdrawal requests, thereby restricting investor liquidity. Experts have supported this measure to mitigate the risk of forced asset sales. Executives at the Bernstein Strategic Decisions Conference indicated that redemption requests in private credit vehicles are expected to remain high throughout the year. In a related development, Switzerland's Partners Group announced it is capping withdrawals from an $8.6 billion private equity fund due to accelerated redemption requests, signaling that investor concerns about private credit are extending to other market segments.