UBS wealth management advised overexposed clients to reduce private credit allocations in late 2025, triggering a rush for exits at Blue Owl Technology Income (OTIC), a $3bn direct lending fund the Swiss bank helped design and distribute. The fund, launched in 2022 after consultation with UBS, had drawn 60 per cent of its capital from the bank's predominantly Asian client base — double the concentration limit other major private capital firms impose on single distributors.

Redemption requests hit 15.4 per cent of assets in the fourth quarter, generating roughly $400mn in net outflows, according to KBRA. The pace accelerated in early 2025, with tenders exceeding 40 per cent of the fund's value. The withdrawals followed the collapse of auto lender Tricolor and First Brands Group, which exposed lax underwriting across credit markets; UBS O'Connor held 30 per cent exposure to the car parts group in one fund. The bank also warned that fierce competition for new loans was compressing spreads, while AI-driven disruption threatened software companies — a core borrower cohort for OTIC.

Blue Owl maintains the fund's credit performance remains sound, citing a 0.2 per cent non-accrual rate and stable 9.2 per cent distribution yield. Yet the episode reveals a structural vulnerability: as private credit firms chase retail capital through bank platforms, they cede control over investor flows. Funds overly reliant on a single distributor face sudden, outsized redemptions when that channel changes its view — a risk the industry has yet to price.