A new report from alternative investment platform iConnections in partnership with J.P. Morgan Asset Management provides a valuable snapshot of current behaviour and preferences among alternative allocators.
The report is based on a survey of over 500 limited partners (LPs), including pension funds, family offices, foundations and endowments, as well as other research data.
LPs polled appear strongly committed to alternatives, with 67% looking to increase allocations in 2026, 26% maintaining current levels, and only 2% planning to pull back. That said, the report notes that the environment has become more demanding, with some opportunities far more favoured and remunerative than others.
Redemption patterns show LPs prioritising liquidity, with 44% making their redemptions from public funds last year, 23% from private markets funds, and 33% from both. One-quarter of LPs cited insufficient liquidity as the greatest risk facing their portfolios today, surpassed only slightly by global macro risk at 26%.
Likewise, asset class preferences showed greater selectivity and more careful approaches. Some 29% were maintaining their allocations to private credit heading into 2026 – a recent poster child among alternatives – while 26% were more cautious and slowing deployment, and 15% were actively reducing exposure. Only 8% found private credit increasingly attractive.
By contrast, LPs favoured hedge funds in particular as they now apparently prefer nimble, liquid and tactical strategies that are able to reposition quickly and manage volatility. The main underlying themes driving this preference was apparently the artificial intelligence supercycle, cited by 83% of investors. Around 70% cited geopolitical events while 55% pointed to political or regulatory changes.
Ambivalence towards some alternatives also surfaced in an announcement on April 27 by hedge fund and alternatives firm Saba Capital Management regarding its attempt to offer liquidity to investors in Blue Owl Capital Corporation II, a non-traded private credit fund. The tender was priced at a 35% discount, but failed to garner more than 1% of the offer amount.
The fund was notable for halting redemptions in February as investors sought to pull money out. Saba Capital said it saw an opportunity to provide investors with liquidity. However, they were clearly not ready to accept the discount.
All the same, the opportunity appears to remain open. “Hundreds of billions of dollars of private credit are currently held by retail investors in products that offer limited or no secondary liquidity,” Saba Capital said.
This is hardly a ringing endorsement for the asset class. Fortunes amid alternatives look likely to remain unpredictable.
