Ares Strategic Income Fund Caps Q2 Tender at 5% as Redemption Demand Reaches 14.4%
Ares Strategic Income Fund, or ASIF, will repurchase shares equal to 5% of its outstanding common shares in its second-quarter tender offer after investors submitted redemption requests covering 14.4% of shares outstanding – nearly three times the fund’s quarterly cap – the nontraded business development company disclosed in an amendment to its tender offer statement.
The fund received tenders for approximately 56.9 million shares, or roughly $1.54 billion at the May 31 net asset value of $27.00 per share across all share classes. It will accept 34.7% of requested amounts on a pro rata basis, with priority given to holders of fewer than 100 shares.
Net asset value held flat at $27.00 per share as of May 31 for Class I, Class S, and Class D shares. The fund’s aggregate NAV stood at approximately $10.8 billion, supported by a portfolio of 831 investments with a combined fair value of approximately $21.7 billion. Debt outstanding totaled approximately $11.2 billion, for a debt-to-equity ratio of 1.06x, or 1.03x net of approximately $301 million in cash. The fund reported approximately $4.8 billion in available capacity under its credit facilities.
Monthly distributions remain unchanged at a gross rate of $0.2143 per share across all classes. The fund has declared distributions at the same rate through September 2026.
The Q2 2026 demand, at 14.4%, surpasses the fund’s first-quarter redemption request rate of more than 12% of shares, when investors tendered more than $1.2 billion in shares and ASIF fulfilled 43.1% of requests, paying $523.5 million. The fund opened Q2 in late May with a credit facility expansion to $4.1 billion, citing the redemption environment as a factor.
One forward-looking factor disclosed at the second-quarter tender launch: certain Class I shareholders who purchased through private placements under Regulation D remain restricted in the percentage of their shares they may tender in any quarterly offer before the fourth quarter of 2026, when those restrictions lift. That could open additional redemption demand in Q4.
The 14.4% demand at ASIF adds to a second-quarter picture of sustained – and in some cases accelerating – redemption pressure across the nontraded BDC sector. Apollo Debt Solutions BDC disclosed this week that withdrawal requests reached approximately 16.8% of its shares for the second quarter, the largest demand the fund has reported since its 2022 launch, and it will also honor only 5% of shares outstanding. Blackstone’s Private Credit Fund reported 10% demand in Q2 2026 and is prorating at the 5% cap after upsizing to 7% in the first quarter to avoid proration.
Not all funds are seeing elevated demand. Oaktree Strategic Credit Fund reported Q2 demand of 4.5% — below its 5% cap — allowing it to honor all requests in full without proration, a reversal from a Q1 blowout that required an affiliate purchase to absorb overages.
Bank of America analysts projected in late April that nontraded BDC redemption demand would peak in the second quarter of 2026, driven in part by a reflexive dynamic in which financial advisers over-request to compensate for expected prorations – a pattern consistent with the demand levels now reported by ASIF and its peers. AltsWire previously reported that the sector posted its first net outflow quarter in Q1 2026, with nontraded BDC sponsors meeting $6.9 billion in redemptions against $4.9 billion in gross sales, per Robert A. Stanger & Co.
Ares has framed ASIF’s performance as fundamentally sound amid the redemption pressure. The fund reported a 0.98% monthly total return for Class I shares in May, bringing the trailing three-month return to 2.94%, and said May performance was characterized by income generation and modest unrealized gains driven by a rebound in credit markets. Since its December 2022 inception, the fund has generated a 10.27% annualized total return for Class I shares, outperforming the Morningstar LSTA US Leveraged Loan Index by 187 basis points over the same period, the company said.
As of May 31, 77.8% of the fund’s portfolio was in first lien senior secured loans, 92% of debt investments were floating rate, and the fund had investments in 831 portfolio companies with an average position size of approximately 0.1% of fair value. Top industries by investment included software and services at 21.3%, health care equipment and services at 10.1%, and commercial and professional services at 9.9%.
Ares Strategic Income Fund is a publicly registered nontraded business development company advised by Ares Capital Management LLC, a subsidiary of Ares Management.
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