Key Takeaways
- • 23% of LPs now plan to reduce their alternative asset manager relationships, up significantly from 16% in 2020, driven by geopolitical uncertainty and portfolio optimization concerns, according to Coller Capital's latest Global Private Capital Barometer.
- • 38% of LPs still intend to expand their manager lineups, indicating that while consolidation is accelerating, growth in manager relationships remains more prevalent than reduction across the LP community.
- • Private credit allocations cooling sharply: LP appetite for private credit fell from 42% planning increases to 29% over the past six months, while infrastructure enthusiasm declined from 39% to 31%, reflecting both natural market maturation and recent negative headlines in private credit.
- • 57% of LPs expect no significant changes to overall allocations, suggesting strategic stability in asset class positioning even as manager roster consolidation accelerates and geopolitical risks weigh on decision-making.
- • Operational friction driving manager exits: 85% of LPs have reconsidered future investments due to poor fund operations alone, indicating that manager performance and operational quality—not just returns—are becoming critical retention factors.
Summary
Limited partners are increasingly moving toward portfolio consolidation, reducing the number of alternative asset managers they work with as geopolitical uncertainty pressures institutional investment strategies. According to Coller Capital's Global Private Capital Barometer, 23% of surveyed LPs indicated they plan to streamline their manager rosters—a substantial increase from 2020, when only 16% expressed similar intentions. This shift signals a broader movement toward concentrated, higher-conviction manager relationships rather than diversified multi-manager approaches.
Despite the consolidation trend, portfolio expansion remains more common than reduction. Thirty-eight percent of LPs surveyed expect to increase the number of managers in their portfolios, suggesting bifurcated LP behavior—some institutions are doubling down on selectivity while others continue building diversified manager networks. The divergence reflects differing institutional risk tolerances and allocation philosophies in navigating heightened market uncertainty.
Within alternative asset classes, enthusiasm is notably cooling. Private credit allocations experienced the most dramatic shift, with LPs planning increases dropping from 42% to 29% in just six months. Infrastructure allocations similarly declined from 39% to 31% during the same period. Coller Capital attributed this pullback to both natural market saturation following rapid growth cycles and recent negative headlines impacting investor sentiment toward private credit specifically. However, the firm emphasized that LPs are not wholesale abandoning these strategies—rather, adopting a more cautious stance on expansion.
Operational quality has emerged as a critical differentiator in manager retention. Research indicates that 85% of LPs have reconsidered or rejected future investments based on poor fund operations alone, underscoring that GPs cannot rely on historical performance alone. As LPs consolidate their manager portfolios, operational excellence—including transparency, liquidity management, and communication—has become a threshold requirement for continued relationships and capital deployment.
Notably, 57% of LPs anticipate maintaining their current asset class allocations despite broader portfolio shifts, suggesting that while manager consolidation and private credit caution are real trends, the LP community remains broadly committed to alternative investment exposure in 2026.
Despite the consolidation trend, portfolio expansion remains more common than reduction. Thirty-eight percent of LPs surveyed expect to increase the number of managers in their portfolios, suggesting bifurcated LP behavior—some institutions are doubling down on selectivity while others continue building diversified manager networks. The divergence reflects differing institutional risk tolerances and allocation philosophies in navigating heightened market uncertainty.
Within alternative asset classes, enthusiasm is notably cooling. Private credit allocations experienced the most dramatic shift, with LPs planning increases dropping from 42% to 29% in just six months. Infrastructure allocations similarly declined from 39% to 31% during the same period. Coller Capital attributed this pullback to both natural market saturation following rapid growth cycles and recent negative headlines impacting investor sentiment toward private credit specifically. However, the firm emphasized that LPs are not wholesale abandoning these strategies—rather, adopting a more cautious stance on expansion.
Operational quality has emerged as a critical differentiator in manager retention. Research indicates that 85% of LPs have reconsidered or rejected future investments based on poor fund operations alone, underscoring that GPs cannot rely on historical performance alone. As LPs consolidate their manager portfolios, operational excellence—including transparency, liquidity management, and communication—has become a threshold requirement for continued relationships and capital deployment.
Notably, 57% of LPs anticipate maintaining their current asset class allocations despite broader portfolio shifts, suggesting that while manager consolidation and private credit caution are real trends, the LP community remains broadly committed to alternative investment exposure in 2026.
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