Investors stay committed to private markets but sharpen manager selection

Jeremy Coller

LP commitment plans to private markets remain resilient, with almost all investors surveyed expecting to maintain or accelerate their commitment pace, although some investors plan to reduce their number of GP relationships.
Private credit secondaries are expected to be the fastest-growing part of the secondary market.

The 44th edition of the Coller Capital Global Private Capital Barometer reveals that geopolitics is playing a greater role in private markets allocation decisions than previously, as surveyed Limited Partners (LPs) also show signs of becoming more selective about the General Partners (GPs) they deploy capital to.

Just over a third (37%) of surveyed LPs say the geopolitical environment and outlook are influencing their private markets allocation decisions more than in the past, with nearly half of European (46%) and Asia-Pacific (47%) investors saying this.

At the same time, surveyed LPs are becoming more selective, with almost a quarter (23%) of LPs expecting to reduce the number of GP relationships across their private markets portfolios over the next three years, compared with 16% when Coller Capital last asked the question in 2020. Yet, Asia firmly bucks this trend, with at least half (53%) of regional respondents expecting to increase GP relationships within the same period.

Despite disparate views around GP rosters, globally LPs remain resilient in their support of private markets, with a third (33%) expecting to accelerate their rate of commitments to the sector and 57% expecting their pace to remain the same over the next two years.

The Barometer surveyed 108 LPs from around the world, more than half (55%) of which had more than $10 billion under management and who collectively oversee over $2 trillion in assets.

Jeremy Coller, Chief Investment Officer and Managing Partner of Coller Capital, said: “Recent high profile public market moves have put the exit window back at the centre of the conversation. That is encouraging, but it would be wrong to see IPOs and secondaries as competing routes to liquidity. The Barometer makes it clear that they are complementary. Secondaries have become a core route to liquidity and a central part of how LPs allocate, rebalance portfolios and retain exposure to assets they continue to have conviction in. Two-fifths of LPs in this Barometer expect continuation vehicle activity to keep growing even as traditional exits recover, which tells you something about how structural this shift to secondaries has become.”

Peter Kim, Partner and Head of APAC at Coller Capital, added: “This Barometer makes clear that Asia-Pacific investors are navigating a different set of considerations to their peers elsewhere. Geopolitics is weighing more heavily on allocation decisions here than in North America, and APAC investors continue to show strong appetite for secondaries as a way to actively manage their portfolios. It’s a reminder that the LP base is not monolithic, and that regional perspectives are becoming an increasingly important part of how private markets evolve.”

LPs brace for more zombie funds

LPs in the survey expect more ‘living dead’ funds to emerge in their private equity portfolios, and most are taking a pragmatic approach to managing the situation. More than half (54%) of LPs expect the number of “zombie funds” in their private equity portfolios to increase over the next two years. A further 31% expect the number to remain stable, while just 15% expect a decrease. Asian LPs are the most supportive proponents of the latter view, with 31% expecting a reduction of zombie funds among their portfolio composition.

However, LPs are not necessarily looking for confrontational solutions. In no-fault situations, the preferred response is a management fee step-down, cited by 54% of respondents. Manager incentive resets, where fund economics are revised to encourage timely exits, come in second at 18%, while manager removal or replacement and taking no action are each favoured by 11% of LPs.

Private credit primary allocation growth cools, but credit secondaries are expected to grow

After several years of rapid expansion, private credit appears to be entering a more selective phase. The proportion of investors expecting to increase their target allocation to private debt or credit over the next 12 months has fallen from 42% in Coller Capital’s previous Barometer to 29% in this edition.

Meanwhile, private credit secondaries are expected to be a major growth area. Global LPs rank private credit as the asset class likely to see the greatest proportional growth (36%) in the secondary market over the next three years, ahead of private equity, infrastructure and venture capital. This points to a shift in how investors may seek exposure to private credit, with greater emphasis on seasoned assets, portfolio rebalancing, relative value and active liquidity management. However, divergence is notable among Asian LPs, with 57% viewing private equity as providing most growth opportunity for secondaries, which suggests that regionally, the asset class is continuing to tell an emerging market story.

At the same time, LPs have a more nuanced view of current concerns around private credit than some market commentary might suggest. Only 18% believe there is a systemic problem in the asset class, while 53% believe there is isolated risk above and beyond initial expectations. A further 29% are comfortable that risk is in line with expectations.

In terms of private credit manager selection over the next two years, Asia displays the strongest home bias of all regions. Among Asia’s investor base, 64% view home-grown emerging private credit managers as more attractive than their international counterparts. This contrasts the global picture, which indicates that 70% of LPs based outside of Asia would prefer to draw on other international expertise.

Continuation vehicles remain embedded even as exit conditions improve

The Barometer also shows that LPs have differing views on whether GPs are striking the right balance between providing liquidity and allowing portfolio companies more time for value creation. While 40% of LPs believe GPs are generally getting the balance right, 39% say GPs are not providing liquidity early enough. A further 22% say some of the best companies are being sold too early.

Against this backdrop, continuation vehicles appear to have become an established feature of private markets rather than a temporary response to subdued exit conditions. Industry data underscores this: GP-led secondary volume reached approximately $106bn[1] in 2025, a record level achieved even as broader exit activity remained constrained. Even when traditional exit channels improve, 40% of LPs expect new continuation vehicle activity to continue increasing, while 29% expect it to remain at current levels and 31% expect it to decline. However, the report highlights regional disparity. While 38% of North American respondents expect overall use of such structures to reduce, 57% of Asian LPs anticipate that they will be used more widely in what is likely a reflection of their market nascence.

AI may widen the gap between managers, but LPs say gut instinct still matters

LPs expect artificial intelligence to reshape private markets operations, but most do not yet see it primarily as a direct source of alpha. 70% of LPs expect GPs to use AI primarily as a cost-efficiency tool over the next five years, compared with 22% who see it as a source of return outperformance and 8% who see it primarily as a risk-management tool.

Even so, LPs expect AI adoption to affect performance dispersion. Around two-thirds (67%) believe AI adoption by GPs will widen return dispersion between leading and lagging performers, while 33% expect it to level the playing field.

The findings also underline that private markets remain a human-led asset class. Among LPs making fund and co-investment decisions, 61% say there has been no change in the importance of gut instinct, while 22% say it is increasing in importance. Asia constitutes an outlier in this space, with 36% of regional investors attributing less importance to gut instinct across LP fund and co-investment decision-making, with 40% also considering it to be relatively less applicable to the GP company investment decision-making process.

Evergreen funds gain ground, while tokenisation remains niche

As private markets continue to broaden their capital base, LPs expect evergreen vehicles to grow in importance. Nearly three-quarters (73%) of respondents expect the proportion of total private markets assets under management held in evergreen vehicles to increase by 2035, including 36% who expect a significant increase.

By contrast, most LPs remain unconvinced about tokenised funds as an institutional access route. Overall, 85% do not expect their institution to access private markets investments via tokenised funds.