Wealth Channel Inflows Grow as Redemption Requests Slow

Alternative asset managers wrapped up second-quarter earnings with a consistent message from the wealth channel: inflows remain strong and redemption requests are easing. Blackstone, Apollo, KKR, Ares, Blue Owl, Carlyle, Brookfield, and others all reported growth in capital raised through advisors, interval funds, and evergreen vehicles.

Blackstone, the largest publicly traded alternative manager, said its global private wealth AUM rose 16% year-over-year to $324 billion. Second-quarter sales reached $8.6 billion. The firm also launched the first two interval funds developed with Wellington and Vanguard. Across its evergreen strategies, Blackstone posted gross sales of $2.4 billion for BXPE (private equity), $900 million for BXINFRA (infrastructure), $1.2 billion for BREIT (real estate), and $1 billion for BCRED (non-traded business development company).

BCRED saw $1.2 billion in net outflows. Redemption requests exceeded the 5% quarterly limit. Blackstone met roughly half of them. President and COO Jonathan Gray told analysts the pace of requests is now declining. “We have been here before with BREIT, and while it is early in the third quarter, redemption requests are down materially,” Gray said. “Looking forward, our performance supports innovation.”

Robert A. Stanger & Co., a firm that tracks evergreen funds, reported that non-traded BDCs cumulatively raised $2 billion in the second quarter, down 82% from a year ago and the lowest since the fourth quarter of 2020. Redemptions exceeded new capital, producing net outflows of $3.8 billion. Repurchase requests hit 12.4% of NAV, a new high. Sponsors met 38% of those requests, returning $5.9 billion to investors. For the first half, sponsors returned $12.7 billion.

Third-quarter data so far shows improvement. Three NAV BDCs reported repurchase requests equal to 4.6% of NAV, down from 7.9% in the second quarter. Management teams said two-thirds of second-quarter redemptions came from the first-quarter queue, which is now clearing. Blue Owl co-CEO Marc Lipschultz said his firm’s non-traded BDC redemptions are down while other wealth-dedicated products have not seen increases. “We’re cautiously optimistic that non-traded BDC redemptions will keep coming down, and it appears others are seeing that too,” Lipschultz said.

Several executives noted that most redemption requests originated from Asia-based investors. U.S. redemptions remained more muted.

Other firms reported strong growth. Blue Owl and Carlyle each posted inflows up 60% year-over-year. Stepstone logged a record quarter with $2.8 billion in subscriptions. Ares Management raised $3.9 billion, up 15% year-over-year, and finished the quarter with $76 billion in wealth product AUM. Ares CEO Michael Arougheti said the firm has built a product offering that meets investor needs across durable income, tax advantage, real assets, and diversified growth. “We’ve demonstrated that we can consistently scale in the wealth channel even as investor sentiment shifts across asset classes,” he said.

KKR reported $3 billion of inflows across its K-Series funds for accredited investors, with AUM reaching $42 billion – growth of 70% year-over-year and 20% year-to-date. KKR also discussed a partnership with Capital Group to reach mass-affluent investors. CEO Scott Nuttall said the key is spending time with advisors so they understand the firm’s strategies. “The second thing I would say is obviously you need access, and you need distribution. We’re building those relationships,” Nuttall said. KKR carries an Alpha Score of 47 out of 100 on AlphaScala, reflecting a Mixed label. Its stock page is at KKR stock page.

Apollo used its earnings call to update on daily NAV pricing, which began July 1 for fixed-income funds. The firm aims to extend daily pricing to all credit assets by Oct. 1. Apollo also invested in secondary market-making infrastructure through a joint venture with Intercontinental Exchange. CEO Marc Rowan said the changes are meant to bring Apollo closer to wealth investors. “It’s not to say the rest of the industry is ignoring this. It’s just no one is as fully committed to what we see as this big trend,” Rowan said. ICE, which operates the New York Stock Exchange, has an Alpha Score of 53 out of 100, also Mixed. Its stock page is at ICE stock page.

Product development was a common theme. Blue Owl plans several new wealth products over the next 18 months in alternative credit, real estate, and infrastructure. Stepstone is exploring private equity, credit, infrastructure, venture capital, and secondaries. Hamilton Lane discussed building a suite of international funds and launching new vintages in special situations real estate secondaries and multi-strategy growth equity. Blackstone is rolling out a new evergreen multi-strategy hedge fund called BXHF.

Management teams also addressed growing competition. Some smaller asset managers are launching single-fund products for the wealth channel. Executives predicted the herd would thin, with clear winners emerging and some players consolidating. To retain market share, the largest firms have invested heavily in in-house sales teams and product listings on alts platforms.

For the third quarter, early Stanger data shows repurchase requests at 4.6% of NAV, well below the second quarter's 12.4% peak. If that trend holds, net outflows could turn positive in the second half. The next data point comes at September quarter-end, when Stanger will report third-quarter totals.