UBS: Investors Shift to Hedge Funds, Pull Back on Private Credit

At an investor conference on Thursday, UBS Global Wealth Management co‑presidents Iqbal Khan and Robert Karofsky reported that clients are reallocating assets into hedge funds and multi‑strategy vehicles and reducing exposure to private credit amid market uncertainty and recent redemption pressures.

Karofsky told the conference that client activity remains healthy, with investors participating in markets while taking a measured approach to risk. He added that market pricing suggests some easing of tensions linked to the Middle East.

Khan said demand across alternatives is strong but shifting between strategies rather than expanding evenly. He noted increased allocations to hedge funds and multi‑strategy offerings, steady support for private equity, and softer interest in private credit.

Private credit has come under scrutiny after a period of rapid fundraising. In recent months some funds in the sector have reported elevated redemptions and outflows, prompting questions about liquidity and valuation practices in parts of the private markets.

Swiss manager Partners Group recently introduced redemption restrictions on a fund after a rise in withdrawal requests, an example market participants point to when discussing stress in parts of the industry.

UBS, which is a large allocator to private markets and a major distributor of alternative products to institutional and high‑net‑worth clients, said it is monitoring these allocation shifts. The bank also reported that its direct balance‑sheet exposure to private credit remains limited.

“Client sentiment remains constructive despite geopolitical tensions and periods of market volatility,” Karofsky said. Khan added, “Demand remains robust across the alternatives landscape,” while noting flows into strategies that offer investors the liquidity and risk profiles they currently seek.