Ares Management (NYSE:ARES) shares declined 4% on Tuesday after the Financial Times reported that the firm had restricted withdrawals from its $10.7 billion Ares Strategic Income Fund.
The investment manager, which oversees about $623 billion in assets, imposed a 5% redemption cap on the private credit fund. The limit is part of the fund’s structure and allows the firm to restrict the amount of capital investors can withdraw during a single quarter. The move followed a surge in redemption requests, which reached 11.6% in the first quarter amid broader investor outflows from private credit funds.
During the first three months of the year, investors requested withdrawals totaling $1.2 billion from the fund. Ares processed $524 million of those requests, equivalent to slightly more than 40% of the total. In the fourth quarter of 2024, the fund had satisfied all redemption requests even though they exceeded the same 5% threshold.
“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, including the overwhelming majority of shareholders who remain invested,” the company said in its letter.
The Ares Strategic Income Fund is marketed primarily to wealthy individual investors and is considered one of the company’s flagship private credit strategies. Similar redemption limits have recently been introduced by competitors including Apollo Global Management and BlackRock’s HPS Investment Partners unit as the sector faces increasing withdrawal pressure.