A new global survey from Dynamo Software, a provider of alternative investment management solutions, indicates significant shifts in limited partner (LP) sentiment for 2025, with investors re-evaluating strategies and operations in a dynamic market environment. The fourth annual Dynamo Frontline Insight Report, which surveyed more than 90 global LPs, highlights a continued strong attraction to alternative investments, coupled with an increasing desire for direct involvement in investment decisions and a discerning approach to technology adoption.
For the fourth consecutive year, alternative investment allocations are set to rise, with 54% of respondents planning to increase their commitments over the next 12 months. However, the survey reveals a decrease in LPs’ reliance on traditional fund managers, which fell to 70% from 86% in 2023. Concurrently, co-investments have seen a notable increase to 56%, a five-point rise from the previous year, suggesting LPs are seeking greater control over their investment strategies and potential cost savings.
“Asset allocators seem to be signaling that they want a greater say in how their capital is deployed,” stated Hank Boughner, CEO of Dynamo Software. “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.”
Geographic investment focus also appears to be shifting. North America’s share of LP attention decreased to 48% from 78% in 2024, the sharpest decline in the survey’s history. This change coincides with increased participation from European and APAC investors, with interest in Europe and Asia rising to 27% and 23% respectively. Global economic uncertainty, cited as LPs’ top challenge, alongside U.
S.-led geopolitical shifts, may contribute to investors rethinking the balance between global diversification and a home-country bias in capital allocations.
Regarding technology, LPs are prioritizing internal operational improvements while exhibiting skepticism towards certain external tech trends. More than half of LPs (59%) intend to increase their technology budgets over the coming year, focusing on automation, portfolio management, and research tools to address challenges such as fund manager due diligence. Conversely, LPs view technologies like the Metaverse/Virtual Reality (56%), Cryptocurrencies/Blockchain (45%), and AI/Machine Learning (35%) as “overhyped.”
“Given LP sentiment around fund manager reliance, it makes sense that they’re looking for sharper tools to evaluate and engage with GPs,” Boughner added. “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.”
Dynamo Software’s Frontline Insight Reports are published quarterly, offering primary research from online surveys of targeted alternative investor audiences, contextualized by Dynamo’s subject matter experts. Dynamo Software, with a global footprint across North America, EMEA, APAC, and UAE, provides the Dynamo Alternative Investment Platform to empower alternative investors to scale firms and enhance operations across front, middle, and back office functions.
