Institutional investors are largely maintaining their exposure to private credit despite recent negative headlines surrounding the asset class, new research has found.
A survey of more than 50 global institutional investors, family offices and wealth managers by Hedgeweek and the Alternative Investment Management Association (AIMA) found that two-thirds (66 per cent) said recent stress in private credit was having minimal or no influence on their allocations.
Just 14 per cent of respondents said they were pausing or reducing allocations.
Read more: Largest private credit fundraises H1 2026
The findings follow concerns about parts of the private credit market, with several high-profile alternative managers being hit with record redemption requests from their retail-focused business development companies.
The redemptions were driven primarily by concerns over lending standards in private credit and growing fears that AI could undermine the software sector, an area to which the asset class has significant exposure.
However, the survey found that private credit continues to rank among the most attractive alternative investment opportunities outside hedge funds. Distressed private credit was cited by 26 per cent of respondents as one of the most attractive alternatives, while 23 per cent said they preferred direct lending.
Read more: High redemption requests persist across BDCs
The report said the results suggest investors are becoming more selective rather than abandoning the asset class.
“The modal behaviour is greater scrutiny within maintained allocations: caution without capitulation,” the firms wrote in the report, adding that the findings should be interpreted carefully given the survey was weighted towards institutional investors.
The survey also highlighted some reservations around the rapid expansion of private credit strategies by hedge fund managers.
Six in 10 respondents said they viewed the expansion negatively, preferring firms to remain focused on their core areas of expertise. The report said allocators wanted exposure to private credit “only with asset managers with demonstrable expertise and a strategy that avoids style drift”.
