Private Credit’s Angry Investors Are Showing Its Limits

Private credit managers are feeling sheepish. Some of their investors can’t get their money out as quickly as they’d like — and some may be quite angry about that. Cue the tentative non-apologies for any misunderstandings people had about getting their cash back. “Between us, and the advisers who sell our products, I don’t think we made it clear enough,” Doug Ostrover, co-chief executive officer at Blue Owl Capital Inc., told a conference in Australia on Thursday.

Upsetting customers is generally bad news. For private credit firms it will likely hurt their ability to raise fresh funds in future, but more importantly it’s when voters feel burned that politicians smell opportunity. And that rarely bodes well for finance. The best thing that could come from this troublesome spell is that the US rethinks its plan to allow many more private assets into ordinary folks’ retirement funds.