Apollo Global Management Inc expects continued redemption pressure in parts of the US private credit market targeting high-net-worth and retail investors, as sentiment toward the asset class remains unsettled following recent volatility and valuation concerns, according to a report by Reuters.
Jim Zelter, president of Apollo, said he does not anticipate a sharp slowdown in withdrawal requests from semi-liquid private credit vehicles, noting that outflows seen earlier this year are likely to persist rather than represent a one-off adjustment.
The funds in question primarily provide exposure to loans for mid-sized companies and are marketed to wealth channels as a way for individual investors to access private credit strategies traditionally reserved for institutional allocators. Recent redemption activity has highlighted the structural liquidity mismatch inherent in semi-open-ended fund formats, which typically cap withdrawals at around 5% per quarter.
Market stress has been amplified by broader concerns around credit valuation methodologies and the potential impact of artificial intelligence-driven disruption on borrower stability, particularly among lower-rated segments of the market. While underlying fund performance has remained broadly stable in recent months, investor behaviour has reflected heightened caution.
Apollo indicated that redemption pressures may vary across distribution channels, with some investor cohorts demonstrating greater stability than others. The divergence underscores a growing segmentation in private credit fundraising between institutional capital, which tends to remain more stable, and retail-accessible products, which are more sensitive to sentiment shifts.
The firm also warned that some investors may attempt to time liquidity windows, potentially sustaining near-term redemption activity even in periods of steady portfolio performance.
The comments reflect broader scrutiny of the rapidly expanding private credit industry, which has grown significantly in recent years as banks have pulled back from leveraged lending. However, the rise of retail-oriented structures has introduced new liquidity dynamics that are now being tested under less favourable market conditions.
Apollo Global Management Inc executives said the current environment is unlikely to resolve quickly, suggesting that volatility in investor flows could remain a feature of the market as allocators reassess risk and liquidity expectations across alternative credit strategies.
