Private Credit Funds: 5 Years of Net Outflows

A Fund-Level Stress Forecast for Public Non-Traded BDCs

FOURTH IN A SERIES · PUBLIC NON-TRADED BDCS

Prepared by Mark Goldberg | March 11, 2026

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The private credit industry is entering a period where narrative, structure, and liquidity pressures converge. For several years the sector benefited from a favorable narrative built around stable income, low volatility, and insulation from public market swings. That narrative helped drive extraordinary growth, particularly through semi-liquid vehicles distributed through private wealth channels.That period is ending. The $130 billion public non-traded BDC universe is entering its first large-scale liquidity stress test, and the forces driving it have little to do with credit quality or the economic cycle.

The stress arises from something more structural: the collision between investor redemption demand and the liquidity constraints embedded in fund design. Based on the BREIT redemption cycle as a behavioral precedent, this analysis models that collision quarter by quarter, fund by fund, through 2030. The conclusion is that the industry enters net outflow in 2025 Q4 and does not return to sustained positive flows until approximately 2031.

That is five years of net outflows for the existing cohort of these funds - not from defaults or losses, but from the mechanics of how these vehicles were built. NAV will be reduced by approximately 40% through investor outflows alone.

Figure 1 presents quarterly flow trajectories under all three scenarios. Toggle individual scenarios using the controls in the interactive chart.

In this note, recovery is defined as the point at which fundraising for the cohort of funds modeled in this analysis exceeds redemption demand, restoring sustained positive net flows. This definition applies only to the existing funds included in the model; over the forecast horizon, the industry will evolve.

The Behavioral Precedent

When Blackstone's BREIT, a diversified real estate fund, reached it's redemption cap in late 2022, what followed was not a slow erosion it was a cliff. Fundraising dropped from roughly $7.8 billion per quarter to under $500 million within three quarters. The portfolio was, generally speaking, performing. The underlying assets were sound. What broke was advisor behavior.

The dynamic of overwhelming negative coverage of an asset class and advisor's inability to defend the recommendation coupled with the reality that few advisors recommend a new client into a vehicle where an existing client just received a partial redemption fill, is what transforms a liquidity event into a prolonged flow reversal.

The public NT-BDC market shares the same conditions that made BREIT so vulnerable: advisor-mediated distribution, periodic liquidity windows, and investor expectations . The behavioral analog holds.

How the Stress Unfolds: Four Stages

The framework below was introduced in earlier notes in this series. This analysis positions the current market at Stage 3.

–      Stage 1 — Narrative Break: Market commentary or media coverage challenges the narrative of stability.

–      Stage 2 — Gate/Cap Activation: Redemption demand exceeds tender-offer capacity. Partial fills begin.

–      Stage 3 — Advisor Behavioral Shift:  Advisors become reluctant to recommend new allocations when existing clients face redemption friction. This is where the industry is today.

–      Stage 4 — Extended Recovery: Redemption queues persist while fundraising remains suppressed until confidence stabilizes.

What the Redemption Cap Actually Does

Most NT-BDCs impose a 5% quarterly NAV cap on redemptions, applied at the individual fund level. Requests above that threshold are (resubmitted by the advisor) and queued into subsequent quarters. The mechanism is designed to protect fund stability - but it creates a secondary problem that the stress model makes visible.

Because the cap is calculated against a declining NAV base, the dollar amount of permitted redemptions shrinks as assets fall. At the modeled trough, peak redemption demand reaches −$33.5 billion in a single quarter. The gate limits actual outflow to −$6.0 billion and absorbs the remaining $27.5 billion, deferring it into future quarters, where it compounds with new demand.

Across the full horizon, roughly $328 billion of theoretical redemption demand accumulates. Only $52 billion is met. That gap represents not just capital trapped in queues. It represents advisor credibility problems, client frustration, and suppressed new inflows piling up simultaneously. It also creates headline risk.

The gate/cap limits outflows. It also limits the industry's ability to recover.

Stress Timeline

Stress onset:  2025 Q4

Industry NAV at start (2025 Q3):  $130.1B across 21 funds

Peak NAV (2026 Q1):  $143.2B

Peak redemption demand:  −$33.5B  (2026 Q4)

Gate/Cap absorption in single quarter:  $27.5B

Peak capped outflow:  −$6.0B

Net cumulative outflow (base case):  −$52B through 2030

Industry NAV at end (2030 Q4):  $78.4B

Net Positive investor flow estimate:  ~2031

Three Modeled Scenarios

The chart accompanying this note models quarterly flows under three scenarios through 2030 Q4. Only the third is a realizable outcome.

–      Theoretical Maximum: Assumes no redemption cap. Presented strictly as a measure of underlying pressure and not demand that could be satisfied in practice.

–      Base + Lockup Adjustment: Applies a redemption eligibility adjustment based on investor lockups. Most NT-BDCs impose a one-year lockup or early redemption fee; locked capital is modeled at 20% of the implied redemption rate.

–      BREIT Analog (Base Case): Applies the 5% quarterly NAV cap per fund, mirroring the BREIT redemption experience. This is the base case.

The Duration is the Story

The most important observation from the model is not the peak redemption number. It is the length of time the industry remains in outflow.

Under the base case, the industry enters net outflow in 2025 Q4. The majority of the existing funds will not return to sustained positive flows until approximately 2031. That is more than 20 quarters from stress onset. That recovery timeline applies to the current cohort of funds. The broader industry will evolve: new vehicles with clearer redemption provisions and better transparency will be introduced, and capital formation will migrate toward them.

Some managers will emerge from this period with reputational damage that limits their ability to benefit from the next generation of products. Others, including new entrants, will improve on what is still an early-stage market that has, by any honest reading, stumbled. Changes will be necessary.

Where Stress is Concentrated

Stress is concentrated in the largest NT-BDCs. Because redemption caps apply at the fund level, the biggest vehicles manage the largest NAV and therefore absorb the most pressure in absolute terms. Their outcomes disproportionately shape the industry result. The broader semi-liquid private credit ecosystem extends well beyond this cohort. Private NT-BDCs, interval funds, and tender-offer funds represent an additional $161.9 billion, bringing the total universe of similarly structured vehicles to approximately $292 billion. Those segments are candidates for subsequent modeling.

Industry Adaptation

This model evaluates redemption dynamics within the current cohort of NT-BDCs. Over time the industry will evolve. New vehicles may be introduced with clearer redemption provisions and improved transparency including around portfolio liquidity and valuation methodology. As product design evolves capital formation is likely to migrate toward those funds. Some managers will suffer reputational damage depending on their conduct during this stress period and will have difficulty benefiting from a new generation of funds. Others, including new entrants, will improve upon what is otherwise an a clumsy entrance of some institutional managers in the private wealth space. So while net flows will be negative for this cohort/vintage of funds, the industry will rebound in a shorter time frame. In recent comments to PitchBook, I highlight the risk of sustained net outflows more broadly across private credit to be 18-24 months. https://pitchbook.com/news/articles/private-credit-retail-redemptions-liquidity-stress-test

What Comes Next

The industry is entering a period where structure will be tested against investor behavior. The outflow window modeled here should be viewed as a stress cycle and a test for how managers choose to respond. The choices are not simple. Cap redemptions at 5% a quarter and manage the balance sheet to high levels of liquidity. Redeem above the cap to meet investor requests by aggressively repositioning the portfolio toward even higher levels of liquidity. Or gate redemptions altogether to avoid becoming a price taker during synchronized selling of loans. Each path carries a different cost. The deeper question is how managers will meet sustained liquidity demands. Loan runoff alone will not suffice under this level of pressure for this duration. Will managers use institutional or long-dated investor capital (that they manage) to purchase loans from the semi-liquid funds? Are there enough third party buyers for direct loans to sustain pricing through an extended redemption cycle?

In the instance where loans must be sold where synchronized selling is taking place the fundamental question is not whether the market clears. It will. The question is what the price of that clearing reveals about sustained pressure on liquidity in a semi-liquid fund, and whether investor confidence survives the answer.

Sources and Methodology

Data source: Robert A. Stanger & Co., Public Filings

Redemption cap: 5% quarterly NAV cap applied per fund.

Lockup definition: most NT-BDCs impose a one-year investor lockup or fee for early redemption. Locked AUM percentage is predicated on a rolling four-quarter of fundraising. Redemption demand for this segment of AUM is deemed moderate and calculated at 20% of implied redemption rate for all AUM. The 20% factor reflects the assumption that a limited portion of recently raised capital may still redeem during the lockup period.

BREIT Analog (Base Case): Blackstone Real Estate Income Trust (BREIT) is a non-traded REIT that a diversified real estate fund, reached it's redemption cap in late 2022 after investor withdrawal requests exceeded its quarterly NAV cap. BREIT's quarterly fundraising and redemption data were used to construct the trend model applied to this analysis. Its multi-year period of net negative flows provides the closest available behavioral precedent for modeling advisor-mediated redemption dynamics in semi-liquid alternative vehicles.

Funds included in the data set:

• AB Private Lending Fund

• Antares Private Credit Fund

• Apollo Debt Solutions BDC

• Ares Strategic Income Fund

• Bain Capital Private Credit

• BlackRock Private Credit Fund

• Blackstone Private Credit Fund

• Blue Owl Credit Income Corp.

• Blue Owl Technology Income Corp.

• Crescent Private Credit Income Corp.

• Fidelity Private Credit Fund

• First Eagle Private Credit Fund

• Golub Capital Private Credit Fund

• HPS Corporate Lending Fund

• John Hancock Comvest Private Income Fund

• Kennedy Lewis Capital Company

• Nuveen Churchill Private Capital Income Fund

• Oaktree Strategic Credit Fund

• PGIM Private Credit Fund

• T. Rowe Price OHA Select Private Credit Fund

• TPG Twin Brook Capital Income Fund