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Goldman Sachs’ president criticised investment firms for failing to clearly market private credit funds to individual investors, who have been blocked from exiting the vehicles as redemption requests have piled up.
John Waldron, Goldman’s president and chief operating officer, on Wednesday said that private credit’s “enormous growth” merited attention, as funds shifted from targeting institutional investors to raising more money from retail investors, who now comprise about a fifth of the market’s size.
“Not everybody has marketed their product as clearly as, certainly we would like to see with the clarity that this is really not a liquid product,” Waldron said at a Semafor event in Washington.
“It’s not semi-liquid. It’s really illiquid,” he added. “Those retail investors, I think, have the perception of more liquidity than is the reality.”
Waldron’s comments come at a delicate moment for the industry, which has been hit by a spate of outflows as investors scrutinise the health of the businesses that private credit funds have financed.
Investors sought to pull more than $20bn from leading US private credit funds in the first quarter. Almost half of these requests were denied as funds limited withdrawals.
Private credit funds have grown rapidly over the past five years, with funds marketed to individual investors pulling in more than $200bn. The funds have pitched themselves as “semi-liquid”, offering investors the ability to redeem up to 5 per cent per quarter in exchange for access to an asset class that rarely trades.
“In situations where there’s a sense that there [are] undercurrents of trouble in private credit, you could have more redemption pressure where people want their money back and their gates are going up because that’s the way the system works,” Waldron said.
He said the problems in private credit would not become severe unless there were a significant downturn in the economy. But he added: “Obviously the longer the war goes, the more people get cautious about their own businesses.”
Morgan Stanley chief executive Ted Pick earlier on Wednesday had said the private credit industry was “having a learning moment”, but would probably perform in line with the broader economy.
“We’ll call it an adolescent moment where both the lenders and the borrowers are being looked at carefully,” he said.
Critics say the private credit industry’s relatively illiquid assets are poorly suited to individuals who frequently demand quick access to their investments.
Investors in Goldman’s own semi-liquid private credit fund sought to redeem just under 5 per cent of their assets in the first quarter, up from 3.5 per cent in the final three months of 2025 but below the industry average. The firm fulfilled all of its redemption requests.
Goldman has said that its private credit funds focus on institutions, professionals and ultra-high-net-worth individuals, who are used to investing in funds with limited liquidity.
Executives across the industry have argued that the funds are performing as designed and that limits on redemptions have been properly disclosed, often on the first page of the individual fund’s prospectus.
US regulators have changed the rules on 401k retirement funds to open up pensions to the $1.8tn market for loans to riskier borrowers, including private equity-backed companies.
Securities and Exchange Commission chair Paul Atkins said at the IMF Spring meetings in Washington this week that retail investors “have to be willing to take a loss” in private credit, adding: “If you cannot take the heat, get out of the kitchen.”
The IMF warned in its global financial stability report this week that private credit could magnify a macroeconomic shock by increasing defaults and intensifying demand from investors to pull their money out. But it said the risk to the overall financial system was “contained” by the ability of private credit funds to restrict withdrawals.
