The giant sucking sound in private-credit funds got louder in the second quarter as investors tried to pull more money out and got less back.

Investors asked to withdraw $15.6 billion from widely held private-credit funds in the second quarter, up from the roughly $13.9 billion they tried to pull from those funds in the prior quarter.

Despite the rising requests, fund managers returned $5.9 billion in the second quarter, down from the $7.4 billion they agreed to pay out in the prior period, according to data from investment bank Robert A. Stanger.

The tallies highlight two clear trends:

   -- Individual investors have awakened to the fact that they can't exit from 
      the funds -- called business-development companies -- as quickly as they 
      entered, prompting more of them to start withdrawing. 
 
   -- Fund managers are battening down the hatches for a prolonged period of 
      elevated withdrawals. While some big firms like Blackstone opted to honor 
      all redemptions during the first quarter, they have now capped 
      withdrawals at 5% to preserve capital for future investor requests. 

Mixed bag

Redemption requests jumped for most of the big fund managers, including those that were less affected in the first quarter such as Apollo Global Management, Ares Management and HPS, BlackRock's private-credit unit.

Blue Owl, the bellwether for selling private-credit funds to individual investors, got some relief. Redemption requests for its biggest BDC fell to 19% of shares outstanding from about 22%. But that is still more than any of the firm's large competitors.

One bright spot: Redemption requests dropped sharply for a fund managed by Oaktree Capital Management, falling to 4.5% of shares from 8.5% in the first quarter. The fund was one of the few BDCs to report rising net-asset value and no nonperforming loans in the first quarter, according to research from Raymond James.

Bad to worse

While the acceleration of outflows from the BDCs was bad this spring, the slowdown of money going into the funds was even worse. New fundraising for the entire industry was about $500 million in May, the smallest inflow in at least 18 months and a roughly 75% drop from already-depressed levels in January.

If new sales stay this low, they will hurt fund managers, who depend on fund growth to boost their stock prices. The sales results could also drag on the economy. Private-credit funds mostly invest their money by making loans to companies with low credit ratings that many banks are hesitant to serve.

If the funds can't raise new money to replace the capital being withdrawn, they will be less able to keep lending. That would hamper investment and expansion for stronger borrowers and potentially trigger defaults in weaker ones, such as software companies facing replacement by artificial intelligence.

Write to Matt Wirz at matthieu.wirz@wsj.com

(END) Dow Jones Newswires

July 02, 2026 20:00 ET (00:00 GMT)

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