Skip to main content

Three Qualities LPs Look for in a Private Capital Fund Manager

Under-pressure limited partners look to fund managers for more data, greater insight, and a window into fund operations.

Facing slower deal volume and potentially longer lock-ups from term extensions and continuation funds, institutional limited partners (LPs) are under pressure from their underlying stakeholders to provide accurate and timely information about their private capital investments.

As they come under increasing scrutiny, LPs are turning to fund managers to provide assurance. As our Future Private Capital CFO research reveals, LPs are looking for additional performance data, greater operational transparency, and the kind of window into the inner workings of funds that would have seemed unthinkable a few years ago.

Providing this level of information can be a challenge, but funds that do so can create a competitive advantage. So, what qualities are LPs looking for in a fund manager? In this article, we examine them in detail.

  1. LPs want additional performance data, faster

    In our survey, over a third (35%) of our LP respondents said they expect live information about portfolio performance from general partners (GPs) in the next three years. And many of the GPs we surveyed expect to have to provide it.

    This is interesting, because even in the relatively slow-moving world of private capital, LPs are hungry for almost continual performance updates.

    However, providing real- or near real-time information is challenging. Investor portals give LPs live access to data, but if it’s two months old it may not be an accurate reflection of the fund position.

    Nevertheless, LPs are pressing for greater transparency. If there’s a position in the portfolio that is underperforming, they want to know about it sooner rather than later. They suspect that GPs have access to this kind of information well before it’s mentioned in a quarterly report.

    For decades, bodies like the Institutional Limited Partners Association (ILPA) have been pushing for higher standards in investor reporting. At the same time, the U.S. Securities and Exchange Commission is insisting on fair treatment for all investors, regardless of size or influence, as well as more frequent reporting.

    For GPs, offering more information more regularly is a sign of transparency and investor focus, despite the challenges of doing so.

  1. LPs want a window into the fund

    Investors’ thirst for information goes beyond performance data. They want regular cybersecurity briefings. Afterall, no manager wants to report a serious data breach six months after the event.

    Interestingly, our survey suggests that investors also want more information on the fund’s hiring and retention procedures, and details of its service provider ecosystem. LPs understand that investment teams tend to be more successful when they’ve been working together for a while. However, their interest in fund personnel extends beyond high-level dealmakers.

    LPs want to know who the fund’s chief financial officer, chief operating officer, and compliance officer are, and perhaps other C-suite positions too. They may even ask for information on employee churn, and how funds intend to replace senior staff who leave or retire. This area has received greater attention since the Covid-19 pandemic, which sparked the current talent crunch.

  1. LPs want to see due diligence

    In short, LPs want to have confidence in both the people making the deals and the people administering the fund—and they want information on fund service providers for similar reasons. Large LPs conduct due diligence on fund vendors and partners prior to subscribing and may even ask for an annual due diligence review.

    LPs know that outsource partners now play a crucial role in the smooth administration, operation, and compliance of many funds, which means GPs can promote strong global partnerships as a differentiator.   

    Our survey shows that LPs are asking more of fund managers across the board. On top of what we’ve discussed, investors want GPs to widen investment options through a focus on more complex fund structures that offer greater diversification, the ability to tap into more geographical locations, access to additional investment strategies, and financing options.

    Self-serve functionality is also particularly important to LPs. They’ve always wanted access to transparent information that will provide insights into the fund’s performance, the investment performance (by portfolio company), and how their capital balance is derived—especially the management fee and carry interest calculation and allocation. Investor portals are used more frequently not just to provide access to static documents, but to allow investors to examine the details of account balances and key performance information.

    All of this increases pressure on hard-pressed GPs. But while some of it is operationally challenging the rewards are there. Funds that meet investor expectations for transparency distinguish themselves from the crowd.

    Download The Future Private Capital CFO for more information. 

Why CSC?

  • ​​​​​​CSC provides tailored administration and strategic outsourcing solutions to alternative asset managers across jurisdictions and asset types while adhering to global regulations and compliance.
  • Privately held since 1899, CSC is a global company with capabilities in more than 140 jurisdictions. We are the business behind business®. Learn more at