Investors are facing a situation that many likely thought was an outside possibility when they first put their money into private credit. They are having their withdrawals restricted to mere percentage points of what they have requested. They’ve had their hands tied. At FactSet, Colin Devereaux suggests that increased requests for redemptions could stagnate the industry. He writes:
The increase in redemption requests will almost certainly lead to a change in market dynamics within private credit. More time and data will be needed to determine if it is a temporary or long-term impact.
One plausible market outcome could be a combination of stagnation in dry powder (as firms have less opportunity to deploy the dry powder sitting in their current funds) and less fundraising than in recent years due to a lower LP appetite for this segment of the market.
Action Line: Just as the industry could stagnate, many 401(k)s will be introduced to private equity and credit. Your Survival Guy has explained the dangers of this extensively in my series, Private Equity Is the Next Big Thing Coming for YOU. When you want to talk about rolling over your 401(k) into an IRA, email me at ejsmith@yoursurvivalguy.com. And click here to subscribe to my free monthly Survive & Thrive letter.
