Since the fall of 2025, concerns regarding the health of the private credit market have increased, pressuring the stocks of private market managers. Recent media coverage has focused on liquidity changes within a Blue Owl private credit vehicle. We believe this is due to a confluence of events, including:
Concerns that an inevitable economic slowdown will negatively impact private credit markets
Liquidity developments at Blue Owl Corporation that raise significant issues about corporate governance
Heightened redemption requests pressuring certain non-Blue Owl interval funds, especially business development companies (BDCs)
Where we stand
We have purposefully avoided investing in those private credit market segments that carry above-average risk. This positioning has been guided by our economic cycle analysis and rigorous fundamental due diligence process.
We do not view recent developments as a signal of systemic weakness in private credit, as default and non-accrual rates remain within historical ranges. We view the Blue Owl situation as the result of corporate governance shortcomings that led to the suspension of liquidity provisions in one of its funds. As a result, Blue Owl is experiencing a combination of diminished confidence in the underlying strategy and “run-on-the-bank” dynamics impacting the publicly traded shares of the parent company and its BDCs.
What differentiates SWM approach to private market investments
In addition to avoiding these higher-risk areas, we have purposefully focused on segments of the private credit markets characterized by lower risk, below-average historical delinquencies and defaults, and strong long-term track records of income generation.
After several years of strong performance supported by higher rates and favorable lending conditions, dispersion among managers is likely to increase. In this environment, selectivity becomes even more important. Firms with disciplined underwriting, multi-cycle experience, and robust risk controls are best positioned to navigate changing conditions.
We remain confident in our diversified approach to private credit investments and in the quality of the managers on our platform. We will continue to monitor conditions and maintain active dialogue to ensure portfolios remain aligned with each fund’s stated framework and with clients’ broader objectives. We steadfastly believe the SWM approach to private markets can result in enhanced returns and diversification benefits within our total portfolio approach.
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Confidential – For Financial Professional Use Only
This document was prepared by Sandro Wealth Management (“SWM”) solely for use by financial advisors and other investment professionals. It is intended to summarize SWM’s internal due diligence findings and investment committee considerations regarding the referenced investment strategy. It is not an offer to sell, or a solicitation of an offer to buy, any security. The information contained herein reflects SWM’s analysis and opinions as of the date of this document and is subject to change without notice. All information has been obtained from sources believed to be reliable, but accuracy and completeness are not guaranteed. The views and conclusions presented may reflect SWM’s internal analysis and interpretation of third-party materials and public or confidential fund information. As such, the content may differ from or conflict with official fund offering documents (e.g., private placement memoranda, prospectuses, or fact sheets). Readers are encouraged to consult the original fund documents for authoritative information. This material is not intended for distribution to, or use by, retail investors or the general public. Any distribution to clients must be accompanied by offering documents and other disclosures required by applicable law and regulation. Nothing in this document should be construed as personalized investment advice or a recommendation to invest in any security, strategy, or fund. Investment products are subject to risk, including loss of principal. Past performance is not indicative of future results. Please review the full offering documents and consult with appropriate legal, tax, and financial advisors before making any investment decisions.