Institutional investors are becoming more selective about private market investments following recent redemption-driven strains at major asset managers, pension fund consultants said. The wave of investor caution followed caps on withdrawals imposed by a large evergreen private equity vehicle managed by Partners Group this month after an uptick in redemptions, and a comparable action taken by Blackstone in a substantial private credit fund.
Consultants described a climate in which problems within private credit portfolios run by big asset managers have drawn particular attention. Investors are intensifying scrutiny of valuations and lending standards, and are examining how portfolio companies, particularly in software, will cope with competitive pressures tied to artificial intelligence developments.
Private market holdings have underperformed technology-driven gains in public equities, according to the consultants, a dynamic that has prompted some investors to withdraw capital. Those outflows have been concentrated mainly among retail clients, who typically react more quickly to short-term performance swings. Institutional investors, by contrast, have largely maintained their allocations to private markets but are adopting more cautious stances toward future commitments.
Partners Group disclosed that private wealth clients represent roughly one fifth of its $185 billion in assets under management. Despite the redemption pressures and temporary restrictions, the firm confirmed its outlook for 2026.
Stephanie Spozio of consultancy Prevanto said institutional investors have so far retained their target allocations, but in certain instances they may postpone new commitments. Romano Gruber of PPCmetrics added that sentiment has become more guarded and that investors are paying closer attention to product features, especially liquidity terms.
Thomas Breitenmoser at pension adviser Complementa reported that one or two clients have expressed nervousness and asked questions about Partners Group. He noted that some pension funds could ultimately reduce exposure to private markets by letting existing programmes run their course without reinvesting proceeds.
Concerns about private credit extend to how some funds were marketed with seemingly easy liquidity provisions, despite questions about whether those terms were realistic. Benita von Lindeiner of c-alm said performance divergences among managers are becoming clearer, and warned that in the near term, stronger and weaker managers will separate.
Overall, consultants described a shift toward heightened due diligence on private market products, driven by liquidity considerations, credit quality and differences in manager performance. Institutional investors have not broadly exited private markets, but they are moving toward more selective deployment and closer evaluation of fund terms.