Financial advisors are maintaining or expanding their clients' exposure to private markets despite a turbulent first quarter that saw more than $10 billion in redemption requests at major private credit funds, according to Blackstone's Spring 2026 Advisor Pulse Survey. The survey, which polled professionals across the U.S., Europe, the Middle East, Africa, and Asia-Pacific, found that 90% of respondents have increased or held their private equity allocations in the current macro environment. Only 2% reported reducing positions.
The findings come at a time of heightened scrutiny for the asset class. In the first quarter of 2026, investors sought to withdraw over $10 billion from prominent private credit vehicles, triggering redemption gates at several high-profile funds. BlackRock's $26 billion HPS Corporate Lending Fund activated its gate in March, approving $620 million of the $1.2 billion requested. Blue Owl Capital suspended redemptions on its $1.6 billion OBDC II fund and began winding it down. Blackstone itself temporarily raised its redemption limit from 5% to 7% and committed $400 million in firm and employee capital to help absorb a record $3.8 billion in withdrawal requests.
Doug Ostrover, co-CEO of Blue Owl Capital, offered a stark perspective on relative risk. "If you're worried about direct lending at all, you've got to be really worried about PE," he told Bloomberg. The comment underscores the interconnected nature of private market exposures, even as advisors appear undeterred.
When asked about the primary role of private real assets in client portfolios, 50% of U.S. respondents cited diversification away from public markets. The survey notes a renewed focus on hard assets with low obsolescence, or HALO assets, as advisors seek lower-correlation investments. Income generation was the second most common answer at 34%, while inflation hedging and capital appreciation each drew 5%.
The survey also sheds light on advisor preferences for manager selection in private credit. Track record was the most important criterion, cited by 36% of respondents, followed by credit underwriting expertise at 33%. Firm size and scale came in at 22%, while default and recovery rates trailed at 9%. This emphasis on proven performance reflects a broader industry reckoning, as highlighted by a note from Kyle Jorgensen, a director and portfolio manager at Hirtle Callaghan. Jorgensen argued that recent pressure within private credit "reflects a confluence of factors rather than a single systemic breakdown," pointing to rapid asset class expansion, a broader and less experienced retail investor base, isolated credit events, and rising anxiety over software borrower exposure.
Jorgensen drew a critical distinction between structural and fundamental concerns: "A fund that is gating withdrawals because investors are nervous is a very different situation from a fund that is gating because the underlying credits are deteriorating." This nuance is particularly relevant as software loans, which make up 20% to 25% of many direct lending portfolios, face increased scrutiny. Questions about whether AI-driven disruption could erode the stable recurring revenues those loans were underwritten against have unsettled assumptions about customer retention and incremental margins that underpinned much of the middle-market software lending boom.
The survey results align with broader trends in the alternative investment space. For advisors seeking to navigate these complexities, tools like BlackRock Aladdin and RedBlack's recent upgrades offer enhanced private credit analytics and integration. Meanwhile, regulatory attention continues to mount, as evidenced by the SEC and global regulators intensifying scrutiny of the $2 trillion private credit market. These developments underscore the need for careful due diligence as advisors balance the appeal of private markets with their inherent risks.
