Ares Management has capped withdrawals from its $10.7bn Strategic Income Fund, as the private equity firm responds to a sharp rise in redemption requests across the private credit market, the FT reported.

The fund limited redemptions to 5% in the first quarter, following requests totalling $1.2bn, or 11.6% of assets. Ares fulfilled approximately $524m of those requests, leaving a portion unmet.

The move aligns with similar actions by major private credit managers, including Apollo and BlackRock, as the asset class faces increased scrutiny and a shift in investor sentiment.

Despite the elevated redemptions, the fund continued to attract capital, recording $708m in new commitments during the period and maintaining approximately $5bn in available liquidity.

Ares said the decision was taken in the best interests of investors, noting that redemption requests were driven by a limited number of smaller investors and family offices.

The broader private credit market has experienced significant outflows, with funds reporting $13bn in redemption requests in the first quarter, as high-net-worth investors reassess allocations.

The shift comes as private equity-backed borrowers face challenges in exiting investments, increasing pressure on loan portfolios and prompting closer investor scrutiny.

However, Ares indicated that its portfolio remains stable, with no loans more than 30 days past due, and highlighted opportunities arising from market dislocation.

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