Key Takeaways
- • Goldman Sachs' global head of alternatives for wealth Kristin Olson expects private credit to continue attracting capital long-term despite current redemption pressure, citing structural demand for yield and illiquidity premiums that justify allocations in institutional portfolios.
- • Goldman recommends allocating approximately 25% of moderate-risk ultra-high-net-worth and family office portfolios to alternative assets, including private credit, based on risk-adjusted return potential relative to liquidity constraints.
- • Multiple private credit funds including Apollo Global Management and Ares Management have restricted investor withdrawals amid concerns over exposure to software companies facing artificial intelligence-driven disruption, creating near-term liquidity stress across the sector.
- • Goldman characterizes current market conditions as an "education moment" and "learning phase" rather than a structural setback, attributing recent redemption requests partly to investor misunderstandings around liquidity mechanics and redemption windows rather than fundamental asset class deterioration.
- • Goldman Sachs' asset and wealth management division oversees $3.6 trillion in assets across public and private investing strategies, positioning the firm to capitalize on expected expansion in private credit allocations.
Summary
Goldman Sachs maintains a constructive outlook on private credit markets despite intensifying redemption pressure affecting multiple large managers in the sector. Kristin Olson, the firm's global head of alternatives for wealth, told Bloomberg that private credit will continue drawing capital over the long term, driven by persistent demand for yield and the illiquidity premium that alternative assets command relative to public markets. This assessment comes as the sector faces genuine stress, with at least a dozen private credit funds experiencing significant withdrawal requests, and prominent managers Apollo Global Management and Ares Management implementing redemption restrictions.
Goldman's wealth management division recommends that ultra-high-net-worth clients and family offices allocate roughly 25% of moderate-risk portfolios to alternative investments, a category that encompasses private credit alongside other strategies. The firm argues this allocation level reflects the superior risk-adjusted returns available through illiquid investments, compensating investors for reduced liquidity and extended holding periods. Goldman's own asset and wealth management division manages $3.6 trillion across public and private strategies, making the firm a significant participant in directing institutional capital toward private credit.
Rather than viewing current conditions as symptomatic of structural weaknesses in private credit, Olson characterized the market turmoil as an "education moment" for investors. She suggested that some redemption activity stems from investor misunderstandings regarding liquidity mechanics and redemption windows, with some investors testing withdrawal limits based on incomplete information. Concerns have been amplified by exposure questions among private credit borrowers—particularly software companies vulnerable to artificial intelligence-driven business disruption—but Olson indicated that increased familiarity with the asset class over time will support continued expansion of private credit allocations across institutional portfolios.
Goldman's wealth management division recommends that ultra-high-net-worth clients and family offices allocate roughly 25% of moderate-risk portfolios to alternative investments, a category that encompasses private credit alongside other strategies. The firm argues this allocation level reflects the superior risk-adjusted returns available through illiquid investments, compensating investors for reduced liquidity and extended holding periods. Goldman's own asset and wealth management division manages $3.6 trillion across public and private strategies, making the firm a significant participant in directing institutional capital toward private credit.
Rather than viewing current conditions as symptomatic of structural weaknesses in private credit, Olson characterized the market turmoil as an "education moment" for investors. She suggested that some redemption activity stems from investor misunderstandings regarding liquidity mechanics and redemption windows, with some investors testing withdrawal limits based on incomplete information. Concerns have been amplified by exposure questions among private credit borrowers—particularly software companies vulnerable to artificial intelligence-driven business disruption—but Olson indicated that increased familiarity with the asset class over time will support continued expansion of private credit allocations across institutional portfolios.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.