Soros Fund Chief Investment Officer: Investors will face a lot of "pain" in the next 18-24 months

Faced with the great uncertainty caused by AI technology disruption and geopolitical conflicts, Soros Fund issues a warning: the market is entering a deep “exhaustion,” and investors should prepare for a “painful period” lasting up to two years.

“Over the next 18 to 24 months, investors will go through a ‘painful’ period.”

On March 3rd, local time, at the Bloomberg Investment Conference in New York, Dawn Fitzpatrick, Chief Investment Officer of Soros Fund Management, gave a pessimistic outlook for the global markets over the next two years.

“Market participants are dealing with enormous uncertainty,” she mentioned. Factors such as the decline in software company stocks believed to face AI risks and conflicts in the Middle East are intensifying this uncertainty. “Beneath the surface, all these factors are making people feel very exhausted.”

Dawn Fitzpatrick, video screenshot

AI Disruption Spills Over to Credit Markets, Private Credit Faces “Redemption Wave”

The impact of AI on software companies has not stopped at the stock market; the chain reaction has already spread to the private credit sector.

This is the current logical chain on Wall Street: AI may disrupt traditional software business models—leading to revenue declines—then causing these companies to be unable to repay loans on time—ultimately triggering credit defaults.

These default concerns have directly triggered capital outflows. Direct lending funds (also known as Business Development Companies, BDCs) are facing severe redemption pressures. Major Wall Street asset managers like Blackstone, Ares Management, and Blue Owl have recently faced large withdrawal requests from individual investors.

In response to this hot topic, Fitzpatrick made a clear prediction. She believes this high redemption trend will continue, “some structures (fund products) will face pressure.”

However, amid industry pressure, Fitzpatrick highly praised Blackstone’s response strategy. It is reported that Blackstone previously withstood the pressure and met redemption requests amounting to as high as 7.9%.

“In the short term, this will hurt their management fee income,” Fitzpatrick pointed out sharply. “But in the long run, I believe this will greatly benefit their business development.” In the liquidity-tight private credit market, being able to satisfy redemption demands swiftly is undoubtedly a strong boost to institutional credibility.

Regarding Soros Fund’s own operations, Fitzpatrick revealed their “greed when others panic” strategy. She stated that during the sell-off, some assets were mistakenly sold off, and Soros Fund has been buying shares of some BDCs, provided that these companies’ “underlying loan asset portfolios look attractive.”

Risk Warning and Disclaimer

Market risks exist; investments should be cautious. This article does not constitute personal investment advice and does not consider individual users’ specific investment goals, financial situations, or needs. Users should consider whether any opinions, views, or conclusions in this article are suitable for their particular circumstances. Invest accordingly at your own risk.