After two years of uncertainty over whether paper gains would translate into realized returns, alternative investments largely met investor expectations in 2026. According to the newly published SS&C Intralinks 2027 LP Survey, nearly two-thirds of the 370 limited partners (LPs) surveyed worldwide said their alternatives portfolios met or exceeded performance expectations. Now in its eleventh year, the annual survey captures institutional investors' views, including pension funds, sovereign wealth funds, endowments and family offices, alongside insights from a separate panel of 30 general partners (GPs).
The broader findings, however, reveal a more demanding environment for fund managers. Despite positive performance, LPs are becoming more selective about where they commit capital and what they expect from their managers. Deal activity expectations have moderated, LPs are consolidating their manager relationships, and technology capabilities are becoming increasingly important in investment decisions. Together, these trends suggest that strong performance alone is no longer enough for GPs to attract and retain investor capital.
Deal Optimism Has Moderated
The shift is particularly clear in expectations for deal activity. A year ago, 86% of LPs expected deal activity to increase over the following 12 months. This year, that figure has fallen to 62%, while the share expecting a decline quadrupled from 3% to 13%. Fundraising optimism, at 67%, now exceeds deal optimism for the first time in the survey's history. The findings suggest that LPs remain willing to commit capital but are less confident about the pace at which investment opportunities will materialize.
Allocation plans reflect this more cautious outlook. While 85% of LPs still plan to increase their alternatives allocations over the next year, that figure is down from 96% in the prior survey. The share planning double-digit increases fell from 11% to 7%. These results point to a more measured approach to allocation, amid a market with substantial committed but undeployed capital. Global private equity dry powder stood at approximately USD 2.4 trillion at mid-2026, while traditional exits have remained challenging.
LPs' concerns have shifted alongside their expectations for activity. Inflation remains the most frequently cited concern, at 38%, but geopolitical uncertainty rose from 23% to 37%, and valuation concerns increased from 17% to 28%. Interest-rate concerns, by contrast, have eased. The findings suggest that geopolitical developments and asset valuations are becoming more prominent considerations as investors assess the outlook for alternatives.
LPs Are Consolidating Manager Relationships
The survey also points to a shift in how LPs manage their GP relationships. The share planning to add new manager relationships fell from 75% to 65%, while the share planning to reduce their manager rosters nearly quadrupled, from 4% to 15%. Pension funds, sovereign wealth funds, family offices and endowments are among the investor groups leading this consolidation.
This trend is emerging even as reported relationship quality remains high, with 88% of LPs rating their GP relationships as good or excellent. The findings suggest that consolidation is not necessarily a response to dissatisfaction. Instead, allocators appear to be concentrating capital among a smaller number of preferred managers while reassessing the role of other relationships in their portfolios.
As LPs narrow their manager rosters, the criteria they use to select GPs are becoming more evolving. Technology, data provision and transparency are gaining ground alongside traditional selection criteria. Technology and data capabilities ranked second among manager-selection criteria in this year's survey, ahead of reputation and track record. They are also the fastest-rising area of LP expectations, with 41% saying their demands in this area have increased the most since 2024.
AI and Technology Are Shaping Manager Selection
These expectations extend beyond basic technology infrastructure. For 32% of LPs, a manager without a credible artificial intelligence (AI) and technology strategy is not investable. More than half view these capabilities as an increasingly important differentiator.
LPs' own adoption of AI helps explain the growing emphasis on technology. AI is delivering measurable value in their operations for 95% of LPs, while 43% are scaling or embedding it across multiple functions. Nearly three-quarters are piloting agentic AI, which uses AI systems to execute multistep tasks with limited human supervision, or expect to begin doing so within the next 12 months.
For managers, these developments are raising the bar for technology-enabled investor service and access to information. Overall satisfaction with GP technology remains high at 92%, but dissatisfaction has increased from 1% to 8%, while the share of LPs who are very satisfied fell from 40% to 35%. These results suggest that maintaining satisfaction will require managers to keep pace with evolving expectations. Access to portfolio data, self-service dashboards and secure data rooms are increasingly viewed as a baseline expectation rather than a competitive differentiator.
Where Capital Is Rotating
LPs continue to favor private credit, with 70% planning to increase their allocations. Yet it is also the asset class most frequently identified as overweight. At the same time, competition for opportunities has intensified. Direct lending spreads compressed to multiyear lows in 2026 as substantial dry powder competed for investment opportunities amid a still-recovering buyout market. Against this backdrop, some allocators are looking beyond mainstream strategies toward areas such as asset-backed lending and litigation finance.
Preferences for smaller managers have also shifted. The share of LPs favoring managers with less than USD 500 million in assets under management rose from 28% to 49% in a single year. Meanwhile, roughly 40% of LPs reported increased use of continuation, semiliquid and evergreen vehicles over the past year. Together, these findings point to growing interest in specialist managers and investment structures that offer alternatives to traditional fund models.
The Full Picture Is in the Report
The 2027 LP Survey captures a market in which positive performance is coinciding with higher expectations for managers. As LPs become more selective about relationships and place greater emphasis on technology, transparency and access to data, GPs will need to demonstrate their capabilities across both investment management and the broader investor experience.
The full report examines these trends in greater depth, including portfolio performance by region and investor type, the technology capabilities LPs increasingly expect as standard, shifts in allocations across asset classes and geographies, the priorities GPs say LPs are emphasizing and expectations for how agentic AI could reshape manager-LP relationships over the next 12 months.
Download the 2027 LP Survey to explore the complete findings.