The redemption stress at Blue Owl Capital Corp II, a US non-listed private debt fund, has reignited concerns about the resilience of open-ended, or semi-liquid, private asset structures. After reaching its quarterly redemption cap of 5% of NAV, Blue Owl permanently restricted redemptions and moved toward returning capital to investors through asset sales over time.
The episode is not isolated. Other large managers—Apollo, Ares, and Blackstone—have also capped redemptions in private credit vehicles after withdrawal requests exceeded available liquidity. These risks are not new for US retail investors: the past two decades have produced several reminders that assets marketed as semi-liquid can become difficult to exit precisely when investors most want liquidity.
Europe is now confronting the same question through Eltif 2.0. The revised European Long-Term Investment Fund regime, designed to broaden retail access to private assets, has applied since 10 January 2024. Launches were initially slow but have since accelerated, although adoption remains limited, with open-ended funds reaching around €10bn by year-end 2025, according to Morningstar.
This raises an uncomfortable question. After two decades of mis-selling controversies, has the financial sector done such a thorough educational job that European retail investors now recognise that the risk-return-liquidity trade-off makes illiquid assets unsuitable for open-ended funds?
Five lessons are worth stressing. Illiquid assets cannot be made liquid without introducing structural fragility. Stale pricing can create first-mover advantages. Large liquidity buckets may dilute performance while still attracting fund-level fees that are higher than equivalent direct UCITS or ETF exposures. Manager selection is especially difficult because performance dispersion in private markets is high. And closed-end structures are generally better aligned with long-term, illiquid assets.
The recent redemption stress in US private credit funds is therefore a timely reminder for Europe. Liquidity is not a structural feature; it is conditional. It can evaporate under stress even in traditionally liquid markets. In open-ended vehicles holding illiquid assets, that mismatch is amplified.
An amended version of this comment was written for the Asset management supplement of Paperjam magazine’s May 2026 issue, published on 29 April. It is published on the site to contribute to the full Paperjam archive. Click this link to subscribe to the magazine. Is your company a member of the Paperjam Club? You can request a subscription in your name. Please let us know via club@paperjam.lu
