Private Markets Are Opening Up and Getting Harder to Read

Continuation vehicles: the LP complaint

Scott Ramsower, head of private equity funds at the Teacher Retirement System of Texas and chair of the ILPA board, told Capital Allocators that continuation vehicles have become a significant source of friction between general partners and limited partners. There is a joke now, he said, that CV stands for conflict vehicle: general partners often act as both the agent for the seller and the agent for the buyer in the same transaction. m:…2060

The mechanics matter because continuation vehicles can artificially enhance fund metrics like DPI and IRR by locking in value before the full exit process is complete. And 54% of limited partners expect the number of zombie funds in their portfolio to be higher two years from now, a sign that delayed exits are becoming a structural feature rather than a cyclical one. m:…2060

Ramsower's broader warning was about putting private equity into semi-liquid retail structures: doing so removes the long-term horizon that is a core advantage of the asset class. Illiquidity, he said, is a feature, not a bug. m:…2060

Hedge funds: bigger, and more defensive

J.P. Morgan's Making Sense podcast described a parallel concentration. Institutional investors are increasingly using hedge funds as diversifiers rather than return enhancers, and the flows show it: 86% of the $90 billion of flows in the first half of 2026 went to managers with over $5 billion in assets under management. m:…0954

Performance was geographically lopsided. APAC managers delivered an average return of 22%, compared with 4% in EMEA and 9% in the Americas. Within equity long/short, managers at the 75th percentile generated over 12%, while those at the 25th percentile were barely positive at 0.5%. The median long-only manager was up 12%, versus 5.65% for equity long/short. m:…0954

Demand is not fading: 98% of investors expect to maintain or increase their hedge fund exposure. But the bar for being in the room is rising with the concentration of flows. m:…0954

Regulators rewrite the access rules

Citi's Global Trustee and Fiduciary Services team walked through regulatory shifts on three fronts. The SEC is proposing to allow investment advisers to regulated funds to receive performance-based compensation of up to 20% of net gains, subject to board approval and governance safeguards, and is considering non-financial pathways for accredited investor qualification, such as FINRA exams or professional certifications. m:…0678

In the UK, the FCA now allows UCITS and retail schemes to invest up to 10% of scheme property in cryptoasset exchange traded notes, and new legislation effective October 2027 will bring cryptoasset activities like safeguarding and staking under FCA authorization. In Singapore, the MAS stablecoin framework prohibits interest payments on regulated stablecoins. m:…0678

Citi's team also flagged operational details that matter to fiduciaries: the Netherlands AFM identified four improvement areas for asset manager IT recovery, including embedding recovery clauses in third-party vendor contracts; Hong Kong regulators are issuing guidance on product due diligence for private market assets; and ESMA's 2027 work programme emphasizes DORA compliance for critical ICT third-party service providers. m:…0678

The common thread across all three podcasts is access with friction: more investors can reach private and crypto markets, but through structures and rules that change the economics of doing so. m:…2060 m:…0678 m:…0954