Morgan Stanley has once again capped withdrawals from its North Haven Private Income Fund, a $7.8 billion private credit fund managed by its investment management unit. This decision comes after investors requested to redeem 11.6% of the fund's net asset value for the second quarter of 2026, significantly surpassing the fund's 5% quarterly limit. This marks the fifth consecutive quarter that redemption requests have exceeded the predetermined cap.
Since the beginning of 2025, Morgan Stanley's North Haven fund has seen investor redemption requests consistently outpace the 5% quarterly threshold. The fund is designed with a redemption gate to prevent a rush for exits, which could force it to sell illiquid assets at fire-sale prices, thereby protecting long-term investors.
This trend is not isolated to Morgan Stanley. Several other major players in the private credit market, including Cliffwater, Blackstone, and Apollo, have also implemented similar redemption limits on their respective private credit funds. Cliffwater's $33 billion flagship private credit vehicle limited redemptions to 7% in the first quarter after investors sought to pull a record 14%, while Apollo's Debt Solutions fund capped withdrawals at 5% after facing 16.8% in requests during the second quarter of 2026.
The increasing number of redemption caps across the industry highlights growing concerns about liquidity in private credit funds. These vehicles, which provide financing directly to companies, are attractive for their higher yields but come with the inherent risk of illiquid underlying assets. The frequent imposition of redemption limits signals a potential shift in investor sentiment and a re-evaluation of the risk-reward profile of this rapidly expanding $2 trillion asset class.
