Institutional investors increased their stakes in a set of publicly traded private credit funds during the first quarter, according to a review of Form 13F filings with U.S. securities regulators that capture positions as of March 31. The filings offer only a partial view of institutional portfolios, but the data indicate a notable degree of renewed institutional interest in some private credit vehicles even as returns in the strategy cooled.
Filings and the limited picture they provide
The Form 13F filings reviewed cover more than 6,000 filers and a universe of 45 publicly traded funds that operate in or alongside the private credit ecosystem, including business development companies that are aimed at retail investors but are also accessible to institutions. These filings show holdings as of March 31 and do not reflect subsequent portfolio changes.
The review found that 11.5% of those filers increased their holdings in one or more of the 45 funds during the quarter ended March 31, while 3.2% of filers trimmed their stakes in one or more of those vehicles. Across the sample, 279 institutional investors initiated new positions in the space during the quarter.
Performance trends within private credit
Quarterly performance reported by major alternative asset managers shows a cooling of returns in private credit strategies over recent periods. According to recent earnings disclosures referenced in the filings review, credit strategies dipped into negative territory at both KKR and Blue Owl. Apollo’s direct lending funds produced a quarterly return of 0.5%, compared with 8.5% over the prior 12-month period.
Those performance data align with a backdrop in which some parts of the private credit market had attracted heightened scrutiny after several high-profile bankruptcies. Still, large alternative managers have recently described increased institutional interest in direct lending and other private credit areas.
Managers report shifting investor mix
Executives at major alternative asset managers have described a tilt back toward institutions after a period of greater focus on wealth and retail channels. KKR co-chief executive Scott Nuttall said there had been a "shift in the last several weeks" with institutions "coming back to direct lending a bit," adding that institutions were concluding the risk-to-reward ratio on new deals had improved. Mr. Nuttall also characterized the wealth channel as contributing "very small dollars in the grand scheme of things."
Blue Owl’s Chief Financial Officer Alan Kirshenbaum said that "institutions are actually seeing that this is an appealing time to look at credit. In fact some who perhaps had paused credit might be very well coming back."
Buying patterns at individual firms
The 13F data show that, as a group, institutions that filed reports with the SEC were more likely to be buyers than sellers of Blue Owl stock during the quarter. Specifically, 10.3% of those filing institutions increased their holdings in Blue Owl. Of the 611 institutional buyers identified, 335 were reported as initiating new positions in the company.
Scope and limitations
It is important to note that institutions only report certain holdings on 13F forms. Much private credit exposure sits in non-traded vehicles and separate accounts that are not captured by these filings, so the 13Fs represent only a slice of potential institutional exposure to private credit. Additionally, the filings reflect positions as of March 31 and do not account for portfolio adjustments made after that date.
Within those constraints, the filings indicate a shift in behavior among a subset of institutional investors toward public vehicles connected to private credit, even as quarterly returns for some managers in the space cooled.