(HedgeCo.Net) The world’s largest hedge funds are racing deeper into private credit and other private-market strategies, even as the first real signs of strain appear in the booming asset class. Recent reporting shows firms including Point72, D.E. Shaw, Citadel and Bridgewater among those expanding non-public investments as global hedge fund assets swell toward a record $5 trillion, with multistrategy platforms capturing much of the inflows. Bloomberg+1
Millennium Management is raising as much as $5 billion for a new private-markets vehicle, reflecting the scale of demand from institutions hungry for yield and diversification. Hedgeweek The strategy focuses on opportunities that banks are less willing or able to finance, from complex corporate lending to structured deals linked to real assets and cash-flow streams.
Yet the push into private credit is colliding with fresh concerns about liquidity and risk concentration. Blue Owl this week froze redemptions in one of its private-credit funds after a spike in withdrawal requests, a move that rattled investors and highlighted how quickly sentiment can shift when credit conditions tighten. Reuters Morgan Stanley now estimates the global private credit market could reach around $5 trillion by 2029, up from roughly $3 trillion at the start of this year – rapid growth that regulators are watching closely. Reuters+1
Major alternative managers such as Apollo continue to argue that the structural drivers of private credit remain intact, citing bank retrenchment and the need for flexible financing in sectors from infrastructure to technology. ApolloMeanwhile, Carlyle and partners like AssetMark are building new channels to deliver private-market strategies to wealth-management clients, effectively extending hedge-fund-style exposure beyond traditional institutions. Carlyle
For big hedge funds, the strategic bet is that they can use their scale, sourcing networks and risk systems to select the right deals and manage liquidity more effectively than smaller rivals. But the Blue Owl episode is a reminder that private markets are not immune to runs. Investors should scrutinize gate provisions, redemption mechanics and portfolio transparency as closely as expected returns.
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