Andy Sieg, head of Citi's wealth management unit, has affirmed the bank's recommendation of private credit to clients despite heightened market volatility. He noted that withdrawal requests at non-traded private credit funds have significantly exceeded their usual 5% quarterly limits. These funds, known as business development companies (BDCs), typically offer multiyear loans with the option for periodic withdrawals, which has led to some clients being unable to cash out fully.

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Sieg expressed his views during an appearance on CNBC's Halftime Report, emphasizing that private credit, along with private equity, should be viewed as long-term investments rather than quick trades. He explained that clients generally invest for periods of 10 to 30 years and highlighted the importance of thorough vetting by a diligence team for each manager. He mentioned that clients have been satisfied with their returns.

In terms of market performance, many listed BDCs are currently trading 10% to 20% below the value of their reported holdings, according to Valuation Research. Preliminary data indicated that withdrawal requests at 11 of the 14 largest non-traded BDCs averaged 13% in the third quarter, down slightly from 13.9% in the previous quarter but still well above the usual cap.

The International Monetary Fund (IMF) has raised concerns about private credit potentially exacerbating market stress, suggesting that borrowers could draw on committed credit lines during tightening conditions, which may strain fund liquidity.

Citi's wealth management has shown consistent growth, with wealth revenue increasing for 10 consecutive quarters and a 15% rise in the third quarter compared to the same period last year. The bank reported a record inflow of $38 billion in net new investment assets, primarily from existing clients transferring more of their holdings. Net interest income grew by 20%, while noninterest revenue increased by 5%. Sieg noted that organic growth, which omits market gains, surpassed 10%, even as he recognized current market supports.

The response from clients regarding capped withdrawals may indicate the ongoing role of private markets as core investments within wealth platforms.