At a time when geopolitical uncertainty has become an increasingly prominent concern for investors, a growing share of the LP community is looking to reduce the number of asset managers with which they maintain relationships. That is one of the key findings of the latest Global Private Capital Barometer from Coller Capital, published for the Northern Hemisphere summer, which shows an increasing proportion of investors planning to streamline their manager rosters.
According to the report, 23% of the limited partners surveyed said they intend to reduce the number of investment firms in their portfolios going forward. This represents a notable increase from the last time Coller included this question in its investor survey, in 2020, when only 16% of LPs planned to reduce the number of manager relationships.
Even so, more investors still intend to expand their manager lineup than reduce it. Thirty-eight percent of respondents expect to increase the number of managers in their portfolios.
With respect to asset classes, Coller noted that 57% of respondents do not anticipate making significant changes to their overall allocations. However, the survey does reveal cooling enthusiasm for private credit and infrastructure strategies.
Compared with the previous edition of the barometer, the proportion of investors planning to increase their allocation to private credit fell from 42% to 29% over the past six months. For infrastructure assets, the figure declined from 39% to 31% during the same period.
“This may simply represent a natural pause following periods of rapid growth for both asset classes, but the recent negative headlines surrounding private credit are also likely influencing LPs’ allocation plans,” the firm said in its report.
That does not mean investors are turning away from the asset class altogether. Coller emphasized that an “overwhelming majority” of respondents—87%—plan to either maintain or increase their private debt investments over the next 12 months.
What Is Driving Investment Decisions?
Global investors continue to allocate capital to alternative markets, with their long-term investment horizon providing some protection against short-term shocks.
“For that reason, it is not surprising that LPs continue deploying capital into private markets, even amid the unpredictable course of global events,” Coller Capital said in the report.
The survey found that one-third of limited partners expect to accelerate the pace of their commitments over the next two years, while 57% expect to maintain their current pace.
Moreover, 63% of respondents said the geopolitical environment has not altered its influence on their investment allocation decisions. The remaining respondents indicated that geopolitical considerations are playing a greater role in their decision-making process.
Coller noted, however, that the regional breakdown presents a more nuanced picture.
“Among our North American respondents, just under one-quarter (23%) said geopolitics plays a greater role than before. By contrast, investors in other regions appear considerably more concerned,” the report stated, with roughly half of investors in both Europe and Asia indicating that geopolitical developments have become a more significant factor in their investment decisions.
