Getting into a private fund could soon get a lot easier. Getting out is another matter, and this weekend’s Journal ran both halves of that story a few pages apart. On B5, Jason Zweig takes apart the SEC’s plan to open private funds to ordinary investors — we covered the proposal itself on Thursday. On B10, investors in two Blue Owl Capital (OWL) private-credit funds are queued at the exit, and the line isn’t moving fast.
The numbers: Blue Owl Credit Income Corp. got estimated third-quarter requests to redeem 16.8% of its shares, or $3.1 billion. That’s down from 18.8% in the second quarter and 21.9% in the first, so the queue is shrinking. Blue Owl Technology Income Corp. drew requests for 39%, or $1.1 billion, roughly where it was in the spring. Both funds said they’d honor requests only up to the standard 5% cap. None of this means the money is gone. It means it can’t leave on its owner’s schedule. The gate is doing what it was built to do — spare the fund a fire sale. It just wasn’t built for the investor who needs the cash.
Be like Yale, or don’t buy like Yale
That’s Zweig’s point. The SEC’s proposals — lifting the old ban on performance fees in many funds, capped at 20%, and loosening how interval funds let investors cash out — change how these products are sold, not who should own them. An endowment can wait decades, spread billions around and pay a staff to vet managers. A family has a finite timeline, a paycheck or two and no research department, and money it can’t reach at the wrong moment can do real damage. Or in his words: “if you want to invest like Yale, you need to be like Yale.”
His yardstick is the SEC’s own. The 1982 accredited-investor test — $200,000 of income or $1 million of net worth, with the house excluded since 2011 — would be more than $700,000 and $6.6 million today. Near those levels, he figures, an investor can plausibly ride out a gate; at $1 million and $200,000 of income, usually not; below that, as Zweig puts it, fuhgeddaboudit. The sponsors themselves aren’t sailing, either: their stocks are down 12% to 36% this year, and Blue Owl’s closed Friday at $9.08, off 39.22%.
Our read
This is Investments/Risk (IN04), and the order of the questions matters: liquidity and suitability first, yield last. A private-credit fund can show a handsome distribution rate right up until you need the principal for a roof, a layoff or a required minimum distribution. If a private fund turns up on your 401(k) menu or in an IRA pitch, ask three things before you ask what it pays: how often can I redeem, what’s the cap, and what happened the last time requests ran over it? Blue Owl just answered that last one in public. For the record, the desk doesn’t own Blue Owl (OWL), Apollo (APO) or Blackstone (BX), and nothing changes this weekend.
Our rule of thumb: money with a job in the next few years lives in Treasury bills, not in a fund that pays out by quota. Money that can sit for a decade can have a conversation about alternatives — sized so a gated year is an annoyance, not a crisis; both Blue Owl funds have now drawn requests well above the cap for three straight quarters. Find the exit before you walk in, not when the alarm goes off. If one of these is already in your accounts, let’s read the redemption terms together while you don’t need them.