Johnathan Rickman | Blue Vault
Interval funds—investment vehicles characterized by low investment minimums, frequent valuations, and 1099 tax forms—continue to be popular with credit investors, who last year helped boost the sector’s capital inflows and managed assets, Blue Vault data shows.
Year-to-date through October 31, 2025, and based on most recent filings, interval funds tracked by Blue Vault reported $33.2 billion in capital raise, including DRIP, surpassing the sector’s fundraising of $27.2 billion and $17.6 billion for the same time period in 2024 and 2023, respectively1.
The industry also had $150.7 billion in assets under management as of October 31, 2025. Blue Vault’s research includes coverage of 87 active interval funds, most of which focus on private credit investments, but also include private equity and private real estate strategies.
Distribution
The interval fund industry also reported solid maximum distribution rates, with the top five results in double digits:
| Interval Fund | Asset Class | Maximum Distribution Rate |
| Alternative Strategies Income Fund | Credit | 22.03% |
| City National Rochdale Strategic Credit Fund | Credit | 21.92% |
| Flat Rock Opportunity Fund | Credit | 15.10% |
| Catalyst/Perini Strategic Income Fund | Credit | 12.72% |
| Invesco Dynamic Credit Opportunity Fund | Credit | 11.75% |
*Blue Vault data as of October 31, 2025
As of October 31, 2025, and based on most recent filings, roughly half of all funds were fully covering their distributions, posting GAAP earnings payout ratios of 100% or less. Some struggled on that front. For instance, the Alternative Strategies Income Fund, which had the highest maximum distribution rate, also had a GAAP earnings payout ratio of 124.85%. However, that fund, managed by Sachs Capital Group, wasn’t an outlier. In fact, more than a third of the interval funds that Blue Vault tracks in its research had ratios exceeding 100%.
Rising Redemption Rates
While the interval fund industry continues to grow, Blue Vault data shows that average redemption rates for credit-focused funds—a group that consists of BDCs, credit-focused interval funds, and credit-focused tender offer funds—have also grown over the last several quarters.
Year-to-date through September 30, 2025, private credit as an asset class experienced more redemptions than that for private real estate and private equity, which went in the other direction:
Average Redemption Rates by Asset Class
| Period | Private Credit | Private Real Estate | Private Equity |
| Q1 2025 | 2.58% | 2.14% | 1.80% |
| Q2 2025 | 2.76% | 2.14% | 1.59% |
| Q3 2025 | 2.89% | 1.84% | 1.50% |
* Year-to-date as of September 30, 2025, and based on most recent filings
Falling interest rates, tariff uncertainty, and high-profile bankruptcies2 that left several large financial services firms exposed have prompted rising concern about a coming “credit bubble” that could lead to another nationwide recession.
Thayer Gallison, CFA, Senior Vice President of Capital Markets, Head of Product Strategy at Cottonwood Residential, says fourth-quarter industry results that he’s seeing also appear to signal a “potential increase” in redemptions in the credit space.
“Prorating redemptions is better understood by the market at this point, and redemption volumes cycle between different asset classes,” he said. “Redemptions in NAV BDCs have remained steady at just over 5% of NAV per year for the past two years, far from the 20% cap. But recent news of a retail private credit fund extending its redemption limits indicates more pressure may be on the horizon.”3
Gallison’s message to advisors: diversify your alternatives exposure. “All alternative investments have opportunities,” he said. “Never put all of your eggs in one basket. Allocating across alternative asset classes gives you different exposures that can have a counterbalancing effect on changes in the market.”
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References
1 Blue Vault
2 Fallout from First Brands bankruptcy ripples through credit markets – InvestmentNews, October 10, 2025
3 Blue Owl Capital sued for allegedly hiding BDC redemption crisis – InvestmentNews, January 27, 2026
