Praveen Paranjothi on Newnex: This is a key reason why larger LPs…

This is a key reason why larger LPs concentrate their capital in…

Praveen Paranjothi · 2024-06-14T09:59:26.000Z

This is a key reason why larger LPs concentrate their capital in top-tier funds: the fear of zombie funds. Smaller LPs, who may not gain access to top-tier funds, are often better off building a portfolio of emerging managers. The space between top-tier funds and emerging managers is a precarious "death valley" for GPs. Zombie Funds: Just as VCs and PEs are burdened with "zombie companies" that neither grow nor fade away, the Coller Barometer reports that half of LP holdings are "zombie funds." These funds deliver poor returns, struggle to raise subsequent capital, and primarily focus on managing their existing portfolios. LPs typically do not receive their distributions in kind, leaving zombie funds to merely wind down their assets. https://www.funds-europe.com/half-of-private-markets-investors-admit-to-holding-zombie-funds/

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Praveen Paranjothi on Newnex: This is a key reason why larger LPs…