Investors withdrew more cash than they deposited earlier this year, fueled by broader market skepticism regarding loan valuations and the potential impact of artificial intelligence on corporate borrowers. While Zelter described the underlying performance of these funds as solid throughout the spring, he anticipates that the current turbulence will persist. Managers of these vehicles typically allow investors to redeem up to 5% of their holdings per quarter, a structure that Zelter suggests may invite attempts to capitalize on the exit windows.

He noted that while some international investors remain committed, the firm is currently distinguishing between long-term partners and what he termed shorter-term tourists. Zelter cautioned that redemptions might even tick upward as participants attempt to navigate the system, confirming that the firm has not yet reached the end of this volatile cycle.