LPs Favor Co-investments, Adjust Geographic Focus, and Apply a Critical Lens to Technology

Now in its fourth year, Dynamo’s global survey of Limited Partners (LPs) points to notable shifts in allocator sentiment in 2025, signaling how investors are rethinking strategy and operations in a fast-changing market over the next 12 months.

Results of the survey — which polled more than 90 global LPs — along with contextual analysis of the findings, are now available in the Dynamo Frontline Insight Report: Analyzing Trends, Identifying Challenges, and Harnessing Insights from Leading LPs & Asset Allocators.

Stand-out findings from this year’s report, include:

• Alternatives investment allocations will rise again, with interest in co-investments climbing and reliance on fund managers falling.
• An increase in survey responses from Europe and APAC may indicate shifting regional engagement, though it remains uncertain whether this reflects a broader trend in LP allocation or simply the geographic distribution of respondents.
• Attitudes about the promises of technology diverge. As LPs plan to grow their own firms’ technology infrastructure, they appear to place higher scrutiny on external tech investments.

LPs seeking a more hands-on approach with co-investments

Asset allocators remain strongly drawn to alternatives, with 54% of respondents planning to increase their allocations again over the next 12 months, marketing the fourth consecutive year of growth. However, Dynamo’s survey results seem to indicate that LPs are less interested in handing money over to fund managers than in prior years. Reliance on fund managers fell to 70%, continuing a decline from 86% in 2023.

This year’s survey also shows more pension funds, endowments, family offices, and other LPs choosing to invest directly alongside fund managers. Co-investments climbed to 56% — five points higher than last year. This may be an indication of LPs’ desire for greater control over their investment strategies, as well as cost savings that could enhance returns.

“Asset allocators seem to be signaling that they want a greater say in how their capital is deployed,” said Dynamo Software CEO Hank Boughner. “To remain at the center of value creation, GPs may benefit from doubling down on strategies that foster transparency and trust in their investor relationships.”

Asset allocators may keep more capital at home

North America’s share of LP focus dropped to 48% from a peak of 78% in 2024 — the sharpest decline in the Dynamo LP survey’s history. Yet, this may not necessarily signal waning interest in North America, but rather a stronger home-country bias. More European and APAC investors participated in this year’s survey, and correspondingly, interest in Europe and Asia each rose to 27% and 23%, respectively.

Global economic uncertainty, which LPs cited as their top challenge this year, in combination with U.S. led geopolitical shifts, may be pushing investors to rethink the balance between global diversification and reshoring their capital allocations.

Rising tech investment prioritizes operations over perceived fads

Even as LPs say their own tech spend to improve operations will climb to its highest point in four years, attitudes towards external tech investments hint at tighter evaluation.

As in 2024, more than half of LPs (59%) indicated plans to increase their technology budgets over the next 12 months. Automation, portfolio management, and research tools top the list of tech-stack investment priorities as potential solutions to some of LPs’ biggest problems. This includes fund manager due diligence, which moved up two whole spots this year in the list of LPs’ most pressing investment-process challenges.

At the same time, LPs appear to be casting a more critical eye on external technology investments, naming several as “overhyped,” including the Metaverse/Virtual Reality (56%), Cryptocurrencies/Blockchain (45%) and AI/Machine Learning (35%).

“Given LP sentiment around fund manager reliance, it makes sense that they’re looking for sharper tools to evaluate and engage with GPs,” said Boughner. “As LPs intensify their oversight of GPs and investment opportunities, it will be more important than ever for fund managers to embrace technology that keeps communication clear and LP confidence high.”

About Dynamo’s Frontline Insight Reports

Published quarterly, Dynamo’s Frontline Insight Reports contain primary research obtained through online surveys of targeted alternative investor audiences. The survey results are contextualized by Dynamo subject matter experts in formal Frontline research reports. To date, Dynamo’s research team has focused on delivering noteworthy insights related to the attitudes, predictions, and strategic plans that Limited Partners (LPs), General Partners (GPs), Hedge Funds, Emerging Managers, and Fund Accountants have on a number of alternative investment topics. To learn more about Dynamo’s research reports, visit the Resource Library or contact media@dynamosoftware.com.

About Dynamo Software, Inc.

Dynamo gives alternatives investors a Performance Edge, empowering them to efficiently scale their firm to capitalize on the growing wave of private market opportunities. With the Dynamo Alternative Investment Platform, Limited and General Partners can now run a tightly integrated firm, putting all their data to work to accelerate operations across front, middle, and back office, unleashing teams to work smarter, and allowing leaders to make better investment decisions and scale their firm. Dynamo has a global footprint with operations across North America, EMEA, APAC, and UAE. For more information, please visit DynamoSoftware.com.

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Asset allocators remain strongly drawn to alternatives, with 54% of respondents planning to increase their allocations again over the next 12 months, marketing the fourth consecutive year of growth.