Oaktree’s Non-Traded Credit Fund Shrinks as Redemptions Outpace New Sales

Net investment income kept climbing through the June quarter, but a reset payout and a $22.32 net asset value point to a vehicle now managing outflows rather than growth.

August 14, 2026

Oaktree Strategic Credit Fund contracted over the nine months through June 30, 2026, as share repurchases ran well ahead of new subscriptions and portfolio marks moved lower. Net assets closed the quarter at $4,277.6 million, down from $4,541.8 million at the September 30, 2025 fiscal year end, and net asset value per share fell to $22.32 across all four classes from $23.09.

The reversal in capital flows is the period’s defining feature. The Oaktree Fund Advisors-managed business development company paid $562.5 million for share repurchases during the nine months, against $57.5 million a year earlier, while proceeds from share issuance fell to $516.1 million from $1,263.1 million. Across all classes the fund recorded a net decrease of 5,110,348 shares, compared with a net increase of 47,915,960 shares in the prior-year period.

Tender demand pushes past the 5% target

The fund’s quarterly tender offers cleared at successively larger scale than a year earlier:

• December 2025 — 8,334,146 shares at $22.93, or 4.24% of shares outstanding at the prior quarter close;
• March 2026 — 13,869,408 shares at $22.38, or 6.82%;
• June 2026 — 8,857,122 shares at $22.32, or 4.50%.

The March figure carried the program past its 5% quarterly target and into the additional 2% the board reserves discretion to repurchase. In the prior year’s first two quarters, by contrast, tenders cleared at 0.66% and 0.65%.

A footnote to the March repurchase table discloses that an indirect affiliate of the adviser agreed to buy a portion of an existing investor’s shares at net asset value, a transaction excluded from the reported repurchase totals.

Earnings up, marks down

Operating results held up better than the balance sheet. Net investment income reached $91.2 million for the June quarter and $289.8 million for the nine months, up from $83.0 million and $232.4 million. Total investment income climbed to $171.7 million for the quarter on a larger portfolio, including $5.3 million of payment-in-kind interest against $2.3 million a year earlier.

Valuation moved the other way. Nine-month net unrealized depreciation totaled $108.1 million, most of it on debt investments, versus $13.2 million a year earlier, and net realized losses widened to $31.4 million from $5.8 million. The net increase in net assets resulting from operations came to $150.4 million for the nine months, down from $213.4 million, and Class I total return was 3.44% against 6.05%.

Yield compression is part of the arithmetic. The weighted average yield on debt investments at fair value stood at 9.2%, down from 10.0% a year earlier, while interest expense rose to $46.0 million for the quarter and $139.5 million for the nine months.

Payout reset to $0.16

The board cut the gross monthly distribution to $0.16 per share from $0.18 with the March 2026 declaration and has held it there since, including the July 27 declaration payable August 27. Class I holders were declared $1.54 per share over the nine months.

Distributions still outran earnings. On a per-share basis the fund reported $0.08 of distributions in excess of net investment income for the nine months across all classes, narrower than the $0.30 recorded a year earlier. Accumulated overdistributed earnings widened to $209.4 million from $52.0 million at fiscal year end. The adviser made no expense payments under its expense support agreement in either period.

The fee load moved with the portfolio rather than the share count. Base management fees were $13.9 million for the quarter and $43.7 million for the nine months, up from $13.3 million and $35.3 million, while investment income incentive fees rose to $13.4 million and $42.4 million from $12.2 million and $33.9 million. The nine-month period also carried a $1.2 million reversal of capital gains incentive fee accruals. Total expenses reached $80.1 million for the quarter and $245.2 million for the nine months, with interest expense the largest single line.

Portfolio and leverage

The investment portfolio was carried at $6,796.8 million across 152 companies, against $6,899.0 million and 158 companies at fiscal year end. Senior secured debt accounted for 92.41% of fair value, down from 93.32%, with subordinated debt rising to 7.08% from 6.22%. Application software remained the largest industry exposure at 14.64%. Credit stress stayed contained, with one investment on non-accrual status at quarter end representing 0.1% of debt investments at cost and less than 0.1% at fair value.

Origination activity slowed. The fund funded $2,128.0 million of investments over the nine months, down from $2,977.6 million, while principal payments and sale proceeds reached $2,109.8 million. Portfolio turnover ran at 29.57% against 22.31%.

Borrowings edged up to $2,621.5 million from $2,499.4 million, split between $1,471.5 million drawn on credit facilities and $1,134.5 million of unsecured notes. The asset coverage ratio eased to 262.38% from 275.22% a year earlier, well clear of the 150% minimum the fund’s sole shareholder elected in December 2021. Undrawn facility capacity stood at $1,668.5 million and unfunded commitments at $824.6 million, all drawable immediately. Average debt per share rose to $13.58 from $12.61.

Rate positioning leaves the fund exposed if policy turns. Floating-rate loans made up 94.0% of the debt portfolio at fair value, up from 93.4% at fiscal year end, and the fund estimates that a 100 basis point decline in base rates would cut the annualized net increase in net assets from operations by roughly $38.3 million before any incentive fee effect. Cash and equivalents totaled $218.1 million, including $61.0 million of restricted cash. Geographically the book tilted further toward the United States, at 85.58% of fair value from 82.89%, as United Kingdom exposure fell to 3.82% from 6.01%.

The offering itself continues. The fund is registered to sell up to $5.0 billion of shares on a best efforts, continuous basis and has cumulatively issued 165,375,644 Class I shares for $3,877.8 million, of which $100.0 million was bought by an adviser affiliate, alongside $1,399.0 million of Class S, $9.2 million of Class D and $5.3 million of Class T shares.

A European joint venture

Against the outflow backdrop, the fund opened a new channel in May 2026, forming OSCF EDL JV with Pantheon Sapling to co-invest in first lien senior secured loans to European borrowers. The fund holds 25% of the equity interests to Pantheon’s 75% and does not consolidate the vehicle. The joint venture held EUR 108.4 million of senior secured loans at principal across 15 borrowers at quarter end, carrying a 7.89% weighted average interest rate. The fund’s stake was valued at $13.1 million, against a EUR 41.7 million commitment of which EUR 30.2 million remained unfunded.

Early July offered little sign of a rebound in sales. Effective July 1 the fund issued 119,551 Class I shares for $2.7 million, 157,706 Class S shares for $3.5 million and 44,102 Class T shares for $1.0 million. Class I issuance for the June quarter itself had already fallen to $44.0 million from $540.6 million a year earlier.