Key Takeaways
- • Fund managers are staging large consumer-style events, such as a music festival in Huntington Beach, Calif. attended by nearly 6,000 people last month, to pitch private credit and other private investments to wealth advisers.
- • Apollo, Blackstone, Blue Owl, Carlyle and KKR are among the firms courting individual investors' household wealth as institutional allocation limits were reached, according to fund executives.
- • Investors withdrew an estimated $30 billion from heavily marketed private-credit funds in the first three quarters of this year, per Robert A. Stanger, and new retail inflows have slowed.
- • Blue Owl offloaded $1.4 billion in loan assets early this year and faced more than $10 billion in withdrawal requests from two of its funds, while the company says liquidity has never been an issue.
- • The SEC proposed rules on Sept. 30 that would expand access to private funds for individual investors and could allow managers to take a larger share of fund profits.
Summary
Fund managers are using elaborate marketing events to reach wealth advisers, the gatekeepers to most individual investors, according to a Wall Street Journal report. Nearly 6,000 people attended a festival last month in Huntington Beach, Calif., featuring performances by Wiz Khalifa and Gym Class Heroes alongside wellness and cooking classes. Apollo Global Management and State Street hosted a session on private and public credit, Capital Group staged a session on merging private and public markets, and Franklin Templeton promoted adding private investments to portfolios. Attendees also took part in 15-minute meetings with fund managers in a beach tent.
Private credit has grown from a niche corner of finance into a multitrillion-dollar business that takes on lending traditionally handled by banks. Individual investors have poured money into funds offering high yields from lending to riskier companies, but these vehicles can be illiquid and carry high fees. The WSJ reports that firms including Apollo, Blackstone, Blue Owl, Carlyle and KKR are seeking access to household wealth after institutional investors approached their desired exposure limits. Business-development companies, many sold through wealth managers, have become a key vehicle, and many limit withdrawals to typically 5% of fund value per quarter.
Concerns have grown around Blue Owl, which aggressively courted individuals. The firm sold $1.4 billion in loan assets at the start of the year, and investors requested more than $10 billion in withdrawals from two of its funds this year. A Blue Owl spokesman said software remains one of its strongest performing segments and that liquidity has never been an issue; in early October its flagship fund said more than 90% of its roughly 90,000 shareholders remained fully invested. Per Stanger data, investors withdrew an estimated $30 billion from private-credit funds marketed to individuals in the first three quarters of the year.
Regulatory developments may further open the channel. The SEC proposed rules on Sept. 30 that would make private funds more available to individual investors and could allow managers to take a larger share of profits. The industry has also lobbied the Trump administration to permit 401(k) plans to hold private assets. Some advisers remain skeptical: one Dexter, Mich. adviser noted institutional investors pay lower fees and maintain in-house oversight, while an Orlando adviser said most of his clients are not keen on private vehicles.
Firms are also using sports sponsorships, including tennis, golf and Formula One, to reach affluent investors. Carlyle signed a multiyear sponsorship with Oracle Red Bull Racing, and Apollo partnered with golfer Patrick Cantlay. Carlyle's head of global wealth, Shane Clifford, credited the partnership with expanding client relationships and winning new business.
Private credit has grown from a niche corner of finance into a multitrillion-dollar business that takes on lending traditionally handled by banks. Individual investors have poured money into funds offering high yields from lending to riskier companies, but these vehicles can be illiquid and carry high fees. The WSJ reports that firms including Apollo, Blackstone, Blue Owl, Carlyle and KKR are seeking access to household wealth after institutional investors approached their desired exposure limits. Business-development companies, many sold through wealth managers, have become a key vehicle, and many limit withdrawals to typically 5% of fund value per quarter.
Concerns have grown around Blue Owl, which aggressively courted individuals. The firm sold $1.4 billion in loan assets at the start of the year, and investors requested more than $10 billion in withdrawals from two of its funds this year. A Blue Owl spokesman said software remains one of its strongest performing segments and that liquidity has never been an issue; in early October its flagship fund said more than 90% of its roughly 90,000 shareholders remained fully invested. Per Stanger data, investors withdrew an estimated $30 billion from private-credit funds marketed to individuals in the first three quarters of the year.
Regulatory developments may further open the channel. The SEC proposed rules on Sept. 30 that would make private funds more available to individual investors and could allow managers to take a larger share of profits. The industry has also lobbied the Trump administration to permit 401(k) plans to hold private assets. Some advisers remain skeptical: one Dexter, Mich. adviser noted institutional investors pay lower fees and maintain in-house oversight, while an Orlando adviser said most of his clients are not keen on private vehicles.
Firms are also using sports sponsorships, including tennis, golf and Formula One, to reach affluent investors. Carlyle signed a multiyear sponsorship with Oracle Red Bull Racing, and Apollo partnered with golfer Patrick Cantlay. Carlyle's head of global wealth, Shane Clifford, credited the partnership with expanding client relationships and winning new business.
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