Private Credit Is Showing Cracks. Why Index ETF Investors May Be Better Positioned Than They Think
2026-03-10 07:35:00 ET
Blue Owl Capital (NYSE: OWL) shocked Wall Street in February when it limited redemptions from one of its private debt funds. That comes on top of the failure of private credit backed auto parts maker First Brands Group in late 2025. And more recently, concerns about AI disrupting the software sector has been top of mind, as many software companies are funded in the private credit markets.
Should you run for the hills if you have a diversified portfolio of index exchange-traded funds? No, and here's why.
One interesting aspect of Blue Owl Capital's troubles is that it sold $1.4 billion in investments and is returning capital to investors. However, it is a broad, structured plan put in place by Blue Owl and not one driven by the investors in Blue Owl's investment funds. There are legitimate concerns that Blue Owl sold its best investments, leaving behind undesirable loans.
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