What’s on the minds of investors in 2025?

By Stephen Whitten

We’ve all seen the headlines… Distributions have dried up and are a threat to the Private Equity industry. But at Phronesis we speak to investors all the time and we’re simply not seeing it. 

Yes, investors acknowledge concerns about liquidity and some question the validity of continuation vehicles. We’ve heard stories from investors who have been forced to re-think their pacing models because of lower than anticipated distributions but to most long-term Private Market investors it’s just a blip. Most Private Market investors are savvy, knowledgeable investors who accept there are going to ups and downs along the way. 

We conducted several interviews in April following the Tariff volatility and it was remarkable how many investors simply shrugged and said: “it’s precisely because of the volatility over the past few weeks that we invest in private markets” 

In the final analysis, H1 2025 has been slow and yes distributions are a concern, but certainly not a reason to avoid the category. Perhaps its main effect is to make investors even more discerning about manager selection. Recently we’ve noticed a sharpening of focus on people and process ahead of pure performance. 

In turn this is leading to calls for greater transparency across the industry. As one investor pointed out: 

Our biggest concern is transparency and visibility into underlying portfolio performance compared to public markets. Long lockup periods and limited liquidity make it challenging if market conditions change. The industry could improve investor experience by offering greater standardization in reporting and clearer communication on risks. 

The importance of managers being open and transparent when there is wider economic uncertainty cannot be understated. Managers who were on the front foot during the April volatility were widely praised by investors. At a time of stress, even if the messages were primarily “no change”, investors appreciated the proactive approach. These updates prepared them for questions from internal stakeholders, and helped them ‘look good’. Isn’t that a great client experience?