I have spent the last several weeks speaking with a wide range of investors, allocators, and LPs to gauge their views on the market and how they have been deploying capital over the past 18 months. I have always found it insightful to compare what I am feeling with peers who may have similar or different investment mandates and are mostly seeing the same investment opportunities and GPs. I was a little taken aback by the similarities of the feedback I received from most of the folks I spoke to. Responses like “things have been really slow”, “we are not in a rush to put capital to work”, “we are open to meeting people who think differently”, “this AI thing is really distorting valuations of AI-focused and non-AI-focused businesses”, etc., were heard repeatedly, like a carousel jingle. I have been involved in this private assets investing thing for a while now, and I feel the tectonic plates of the asset class are changing. The zeitgeist’s air feels a little thicker, and lethargy seems to be infecting many perennial participants. I’m not exactly sure how to describe it, and it might just be a phase or a market cycle doing its thing, but there’s a slow fading within overall enthusiasm for the asset class that I don’t like.
You can draw your own conclusions from the summary below of sentiments gathered from conversations with a diverse group of investors.
- FOMO is not hitting as hard as it used to: The FOMO of not being invited into a hard-to-access fund or a fund that is the newest flavor of the month does not seem to have the same allure as it used to years ago. These days, LPs seem to be okay with missing ”hot” things because they are more cognizant than ever that the beauty queens of yesteryear did not necessarily go on to win the biggest crowns. There is a sense of malaise around whether anything is really worth losing one’s mind over. An overarching sentiment was something like “we have a few managers who have been good to us throughout the years, and we will likely stick with those”. I did not hear much about a willingness to stretch efforts to upgrade because there is a feeling that a sea of sameness or averageness is engulfing most of the industry, so the returns that come with this reality just need to be accepted.
- Emerging managers could be the beacon of hope: I get the feeling that emerging managers who can describe or prove how differently they are thinking about investing could be the spark for increased excitement. There is still the uphill battle these managers face to get through the door, but if a toe can maneuver its way through the tiny opening, and if the pitch that accompanies it can resonate with fresh thinking and a plan to exploit an unnoticed market inefficiency, there is hope for LP enthusiasm. No one wants to invest in a new manager doing the same old things that likely already exist in LP portfolios.
- Older funds are attracting an audience, but for different reasons than in the past: Another thing I noticed that maybe contradicts the first two points is that LPs are making new commitments to older funds (Fund Vs and up) that they did not have previous exposure to. It seems the bar of “maybe their best days are behind them” and “succession concerns” has been somewhat lowered. In my view, this is happening because LPs want more data to assess managers’ worst deals in the harshest market climates. So, by default, funds that have been around longer can provide this information. So if an older fund is averaging, say, a 1.4x multiple on relatively weak deals executed in the most unforgiving markets, it provides a degree of comfort (and butt covering) that is hard to find elsewhere. This phenomenon isn’t necessarily new, but I believe the reasoning behind it is now more nuanced, as it’s no longer driven by the risk of investing in newer, less proven funds. Instead, it’s because these newer funds aren’t generating enough excitement and potential to attract LPs like they did before.
- AI is interesting but confusing: AI is piercing through the prevalent gray cloud of LP malaise as a beam of excitement. However, LPs are finding it difficult to quantify what they should be excited about when it comes to AI. Almost all LPs have some AI through a few or several of their GPs. But no one seems sure whether the piece they have exposure to is the right one, or whether they overpaid so much for it that it renders outsized returns unreachable. Will the benefits be realized through the infrastructure layer, the innovation layer, or through application in other verticals? Who knows? It remains interesting but very confusing.
- Non-correlated investments are in the conversation, but for boring reasons: Just like in the past, appetite for non-correlated investments remains, but I don’t see them necessarily exploding in popularity because, in my opinion, their allure leans more towards stability of returns through various market cycles than towards the attainment of outsized returns. You hear logical arguments for stringing a few of these usually high-IRR funds together to create a multiple of invested capital that is potentially interesting. Or, you see the application of leverage on top of these usually “stable returns” vehicles to make them more enticing to private asset investors who have gotten used to the promise of potential outlier returns in their private portfolios. Non-corelated investments in areas such as litigation finance, insurance outcomes, royalties, IP, tax receivables, etc., provide a hospitable place for LPs who kinda want to be in private investing but also kinda don’t. These areas are interesting, but also not really.
In my view, investor sentiment toward capital commitments has shifted noticeably, with less urgency and excitement around “hot” opportunities and a growing sense of industry sameness. Emerging managers offer hope for renewed enthusiasm, but only if they deliver truly differentiated strategies. Meanwhile, older funds are attracting interest primarily for their track records in tough markets, providing data-driven comfort rather than novelty. Finally, while AI and non-correlated investments spark interest, one is clouded by confusion, and the other leans heavily on stability over outsized returns.
Anthony Kwesi Hagan
Founder and Head of Research, FreedomizationTM
October 26th, 2025
