Institutional asset allocators are optimistic about the investment environment for alternative asset classes, with concerns of a recession fading, according to Goldman Sachs Asset Management’s 2025 Private Markets Diagnostic Survey.
The survey, which collected the opinions of both limited partners and general partners, also found that many LPs are under-allocated to alternative investments, when compared to their targets.
Approximately 45% of LPs surveyed reported that they were under-allocated to infrastructure investment targets, 43% to private credit, 35% to private equity, and 26% to real estate. Allocations to co-investments and secondary-market investments were under-allocated by 62% and 45% of investors, respectively.
Among those surveyed, only 9% of LPs were allocated to infrastructure, 12% to private credit, 21% to private equity, and 25% to real estate.
In summarizing the survey findings, GSAM noted that LPs are increasingly consolidating their relationships—aiming to do more with the managers with whom they are already doing business. When evaluating new managers, the most important factors LPs said they evaluate are fees (50% of LP respondents), track records (49%) and team stability (39%).
As a result, GPs are noting an increase in competition for capital, with 38% of GPs saying fundraising for their next flagship fund will take longer than it did for their last fund. The survey summary noted that LPs are more discerning than ever, as there are now more options to access alternative investments.
“The overall trend towards consolidating manager relationships remains, making for a more challenging fundraising environment for non-incumbents,” Matt Gibson, global head of GSAM’s client solutions group, wrote in a report accompanying the survey. “However, LPs continue to seek allocations to new GPs who can provide differentiated alpha and are experts in specialized strategies.”
GSAM noted that many institutional investors are in the early stages of their alternative investing programs. These investors do not have significant existing manager relationships, but can often obtain new relationships by buying on the secondary market.
Investors with mature alts programs, according to GSAM, are increasingly consolidating their exposures to illiquid asset classes with fewer manager relationships, but agreeing on larger mandates with those managers. These investors also are adding new managers in specialized areas, the survey said.
Liquidity and Distributions
Despite private equity distributions slowing down in recent years, LPs are largely maintaining or increasing their deployments to alternative investments, according to GSAM. The lack of distributions did impact deployment plans: Approximately 31% of LP respondents said the lack of distributions from their GPs was the biggest factor affecting their deployment plans, while another 30% said changes to their allocation targets were the biggest factors affecting deployment of resources.
GPs, in 2025, reported being increasingly optimistic about providing liquidity to their LPs. According to the survey, 80% of GPs said they were likely to use strategic sales to generate liquidity over the next year, compared with 56% in 2024. Approximately 70% of GP respondents said they were likely to use sponsor sales, compared with 42% in last year’s survey.
GSAM surveyed 223 limited partners and 35 general partners around the world from June 30 through August 25. Approximately 32% of responding LPs represented pension funds, another 24% were from insurers, and 22% were asset and wealth managers—other institutional investors made up another 22% of LP respondents. GP respondents included private equity managers (71%), private credit (40%), infrastructure (20%) and real estate managers (9%).
The AUM breakdown of LP respondents was: more than $100 billion (16%), $51 billion to $100 billion (10%), $11 billion to $50 billion (30%), $1 billion to $10 billion (33%), and less than $1 billion (7%), according to GSAM.
The breakdown among GPs was: more than $100 billion (12%), $51 billion to $100 billion (6%), $11 billion to $50 billion (21%), $1 billion to $10 billion (44%), and less than $1 billion (18%).
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