Ares Management has limited withdrawals from its $10.7 billion Strategic Income Fund after redemptions jumped to 11.6% in the first quarter, underscoring mounting pressure across the private credit sector, The Financial Times reports.

The firm capped outflows at 5% for the period, a built-in threshold, after receiving $1.2 billion in redemption requests.

Ares fulfilled $524 million of those requests—just over two-fifths—marking a sharp shift after honoring all withdrawals in late 2025 even when they exceeded the cap.

“We have made this decision, as with all capital allocation decisions, aligned with what we believe are the best interests of the fund and all of our stakeholders,” the company said.

The move comes amid a broader wave of investor exits from private credit, with funds tracked by the Financial Times reporting $13 billion in redemption requests in the first quarter alone.

Across those funds, which manage $211 billion, just under two-thirds of withdrawals were met, leaving $4.6 billion unfulfilled.

Ares said the outflows were driven by a “limited number” of family offices and smaller institutions, representing less than 1% of its more than 20,000 investors.

Despite the redemptions, the fund still grew its asset base, bringing in $708 million in new commitments.

The fund holds $20.8 billion in loans and other securities. It posted a 0.7% loss in February.

The surge in withdrawals is raising concerns about the outlook for the $2 trillion private credit market.

Higher rates and sluggish private equity exits are weighing on the asset class.

Analysts warn that gating withdrawals could further dampen appetite among wealthy investors. That trend threatens to slow a key growth engine for firms like Ares, Blackstone, and Blue Owl.

It may also complicate the industry’s push into the $9 trillion U.S. retirement market.

Firms are still awaiting regulatory changes to open 401(k) plans to private investments.

Ares said it remains well positioned, citing roughly $5 billion in liquidity.

The firm added it has no loans more than 30 days past due.

“Drawing on over two decades of experience… periods of market dislocation have historically created some of the most attractive opportunities,” the firm said.