By Bill Alpert

The Trump administration needs to sharpen its investment timing.

Its top securities regulators went all in on cryptocurrency last year, just in time for Bitcoin's 40% tumble. Now, the U.S. Department of Labor is about to propose opening 401(k) retirement plans to private assets, just as investors are jamming the exits of private credit funds like BlackRock HPS Corporate Lending Fund.

On Friday, the nontraded BlackRock fund, commonly called HLEND, became the first big private credit fund to limit redemptions. Like most such funds, the $26 billion fund was ready to repurchase up to 5% of its shares from the wealthy individuals who might want to withdraw cash in a quarter. But this quarter, requests came for 9.3% of the shares.

BlackRock's HPS said it would buy back only 5%, or about $620 million worth, of HLEND shares. Those hoping for the other $530 million worth of shares will just have to try again next quarter. Earlier last week, Blackstone arranged to meet requests to cash out $3.8 billion, or 7.9%, of its $80 billion fund known as BCRED, but only by putting in its own cash and that of employees to meet the excess redemptions.

"We have made this decision, like all prior decisions regarding the fund's capital, with the best interest of all shareholders in mind," said HPS in its Friday announcement. It reassured investors that HLEND's portfolio of corporate loans was solid and should be able to continue producing total returns that averaged 10.7% over its four year history.

BlackRock stock is down 10% since the news on Friday. Deadlines loom for redemption requests at other large nontraded funds.

March 31 is the deadline for redemption requests at the $35 billion Blue Owl Credit Income Fund, while March 16 is the deadline at the $25 billion Apollo Debt Solutions BDC. In February, Apollo said that new subscriptions for its debt fund were down some 70% from last year and Chief Executive Officer Marc Rowan told a conference that he expects a private credit shakeout.

Fund managers and rating firms like Morningstar DBRS say that credit fundamentals at the big nontraded funds remain solid, despite the low-grade bank runs that many seem to be experiencing.

Private credit was supposed to be the perfect fit for retirement plans, when President Donald Trump ordered the Labor Department and the U.S. Securities and Exchange Commission last August to clear away regulatory obstacles to including private assets in target-date funds and other 401(k) menu offerings.

The "mass-affluent" investors that advisors and bank wealth departments shepherded into nontraded credit funds in recent years were supposed to be a vanguard for the 60 million workers with 401(k) plans. Now those mass-affluent investors are heading for the exits.

The SEC did its part, in a staff guidance saying that registered investment funds can now invest over 15% of assets in private funds without limiting their own investor base to a minimum of $25,000 investments.

When the Labor Department proposes new rules, there will be the normal period of public comments and then a final rule by the department. That could take up to a year.

During that year, the employers that sponsor 401(k)s will be able to decide if their working-class retirement savers have a better appetite for private credit than the mass-affluent are now showing.

Write to Bill Alpert at william.alpert@barrons.com

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March 09, 2026 15:56 ET (19:56 GMT)

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