As returns from certain alternative investment strategies and private markets fundraising are losing steam, limited partners’ expectations of their managers are picking up.
A survey by Commonplace—a networking community for limited partners—of 46 asset allocators in early January, completed in partnership with research firm AlphaSense and branding company PC3 Creative, examined investors’ thinking about what they expect from their general partners and about how they expect to allocate to private markets.
Manager Relationships
The survey found that LPs reported focusing on partners with managers that can provide “a clear and defensible edge—one rooted in operational excellence, sector specialization and differentiated sourcing.”
LPs identified “GPs who combine specialist expertise with transparency, exit planning and alignment through meaningful personal commitment are seen as best positioned to outperform in today’s market,” the survey reported.
The survey also identified that 70% of LPs value a fund’s LP base and that it influences allocators’ decision to invest in a fund.
“Many emphasize the value of having thoughtful, experienced anchor LPs who support managers through cycles, rather than short-term capital driven by momentum,” Commonplace stated in analyzing the results of the survey. “Family offices, institutions, and sophisticated fund of funds are frequently cited as desirable peers, particularly for their reputational signal and constructive engagement.”
LPs also indicated that they prefer to invest with managers that have an additive and engaged LP base, rather than a passive list of names.
“While some LPs stress that they strive to make decisions independently, most acknowledge that the presence of likeminded, long-term-oriented investors provides helpful validation and added confidence,” the analysis stated.
LPs also reported wanting greater discipline, transparency and substance from their GPs, especially in the current market environment. This included the need for realistic underwriting and exit assumptions at a time when exits from alternative strategies have slowed down, according to the analysis.
Survey respondents reported wanting their GPs to provide honest, data-driven reporting related to their portfolio performance and company-level metrics.
“Some LPs are looking for GPs to better differentiate themselves—whether through sector focus, sourcing edge or firm-building clarity—and to avoid simply chasing trends or headline themes. The message is clear: in this cycle, depth beats noise, and alignment beats hype,” Commonplace stated.
A narrow majority of LPs reported that they will meet with a manager three to four times before committing capital—with nearly 40% saying they would have between five and eight meetings, and nearly 10% indicating at least eight.
Approximately 60% of LPs said they prefer to rely on their peers to source new funds. Approximately 50% of LPs reported plans to invest with both emerging and established managers, with 30% reporting plans to invest only with emerging managers this year and just 20% reporting plans to invest only with established managers.
Planned Allocations
Survey respondents—of which 61% were single-family offices and 39% were funds-of-funds—reported wanting to maintain (about 50%) or increase (about 40%) their private markets allocations. Fewer than 10% of respondents said they planned to decrease their allocations.
Roughly 30% of LPs said they were accelerating their pacing from 2023-24, while almost 60% of respondents said their pacing would stay consistent. About 10% of respondents said their private markets’ pacing was slowing down.
“Both family offices and [funds-of-funds] in the community [reported] maintaining or increasing their exposure to private markets—driven by the search for higher returns relative to public markets and the long-term trend of companies staying private longer,” the survey stated.
Family offices reported expecting a median internal rate of return of 15% for their private markets portfolio, while funds-of-funds reported expecting 20%.
Top strategies to which LPs said they expect to allocate in 2026 include venture capital (about 70% of respondents), followed by buyouts (about 50%), secondaries (about 40%) and private credit (about 30%). Almost 80% of LPs reported they do not plan to reduce exposure to any alternative strategies.
Top themes shaping LPs’ private market views, according to the survey, were: geopolitics; adoption of artificial intelligence tools and processes; automation; liquidity; and the market for fund exits.
Over the next three to five years, LPs reported they expect the most compelling return opportunities in private markets to be available in market segments where value creation, liquidity and thematic tailwinds play a strong role, according to the survey.
In venture capital, LPs reported interest in agentic AI; capital-efficient business-to-business models; and technology shifts in Europe. In private equity, LPs said they are interested in lower-middle-market buyouts, due to their operational upside and entry multiples, as well as niche, high-conviction strategies.
In the survey, LPs reported being most concerned about geopolitical uncertainty and its impact on innovation, capital flows and competitiveness around the world—particularly in the U.S.—all of which allocators expect to weigh on distributions and portfolio pacing.
Tags: Alternatives, limited partners