Institutions bought more private credit as individuals balked, filings show

By Isla Binnie, Suzanne McGee and Akash Sriram

NEW YORK, May 15 (Reuters) – Institutional investors broadly raised their exposure to some of the private credit funds that have been battered by growing risk aversion during the first three months of the year, according to a Reuters analysis of filings with U.S. securities regulators.

Major alternative asset managers with large private credit businesses, including KKR and Blue Owl, have said in recent weeks that institutional investors are showing renewed interest in direct lending, an area of private credit that attracted intense scrutiny following a handful of high-profile bankruptcies.

The 13F filings, which are one of the few ways to get a partial glimpse into how institutions position their portfolios, show data as of March 31 and do not reflect portfolio changes since then.

Reuters reviewed institutional holdings in business development companies (BDCs), debt vehicles aimed at retail investors, but available to institutions as well. Institutions only report certain holdings, and most private credit sits in non-traded vehicles and accounts so the 13Fs show just a small slice of their potential exposure. 

The Reuters review of filings showed 11.5% of more than 6,000 filers increased their holdings in a universe of 45 publicly traded funds during the quarter that ended March 31, 2026. Only 3.2% of filers cut their stakes in one or more of those private credit vehicles, the data show. A total of 279 institutional investors initiated new positions in the space during the first quarter.

Returns from private credit have cooled, quarterly data from the big managers showed according to their recent earnings. Credit strategies dipped into negative territory at KKR and Blue Owl, while Apollo’s direct lending funds returned 0.5% compared with 8.5% over the last 12 months.

‘VERY SMALL DOLLARS’

Alternative asset managers have pushed to raise funds from wealthy individuals in recent years, seeing it as a path to growth.

But several emphasized a renewed institutional investor appetite for private credit in recent calls with analysts.  

KKR co-chief executive Scott Nuttall said there had been a “shift in the last several weeks” in which he had seen institutions “coming back to direct lending a bit”, as they decided that the risk to reward ratio was getting better on new deals. 

He said the wealth space represented “very small dollars in the grand scheme of things”.   

At Blue Owl, Chief Financial Officer Alan Kirshenbaum said “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.”

Indeed, the 13F filings showed that buyers outpaced sellers of stock in Blue Owl as a group, with 10.3% of all institutions that had submitted their reports to the SEC buying the company’s stock. Of that total of 611 buyers, more than half, or 335, were initiating a position in Blue Owl.

(Reporting by Isla Binnie; Additional reporting by Suzanne McGee and Akash Sriram; Editing by Megan Davies and Daniel Wallis)