3 minutes

What’s Worrying Limited Partners in 2023?

For starters: Inflation and rising interest rates.

2023  LP Survey - Macro and sector outlook

According to the 2023 SS&C Intralinks LP Survey, inflation is a key concern among limited partners. Of the 200 global LPs surveyed about their allocation plans and market sentiment, almost four in 10 (38 percent) signal inflation to be the main factor that will influence their alternatives portfolio. LPs are also concerned about the impact of rising interest rates and access to leverage favorable financing terms.

Recep Kendircioglu, co-portfolio manager and head of infrastructure investments at Manulife Investment Management, comments, “The discussion among LPs last year was more about finding an alternative to fixed income.” Today, that discussion is much more about inflation. In November 2021, Kendircioglu’s firm closed its USD 4.65 billion Manulife Infrastructure Fund II.

Inflation - 2023 LP Survey


Other topics of concern

In addition to inflation and interest rates, the research reveals that LPs are concerned about geopolitical uncertainty (27 percent) and the contraction of the equities markets (25 percent).

Should interest rates continue to rise, 37 percent of LPs surveyed said the greatest impact will be on their access to leverage and financing terms. Capital raising is also expected to become more challenging, according to 24 percent of investors. Other concerns include fewer opportunities to exit via initial public offerings (IPOs) (21 percent). Meanwhile, others see a silver lining and view the current economic landscape as an opportunity to buy undervalued assets (18 percent).

Rising rates could see multiples flatten. Asked what action they would take should this happen, LP responses were diverse, highlighting that investors can have different allocation strategies or capital call responsibilities. One LP said they would “invest [in] funds that specialize in shorting to gain more exposure to private debt while ensuring there is ample cash.” Another shared a similar approach to invest in “opportunistic shorting and continue investing in GP economics.”

In the event that multiples flatten, another LP said they would reduce their exposure to hedge funds and increase venture capital investments. Yet, others said that their hedge fund exposure is already determined by what their funds would do as multiples flatten. Some even see flatter multiples as an opportunity by “slowly allocating towards regions that could benefit from this.”

Regional POV

When it comes to regional preferences, North American fund managers and their access to regional alternative assets are expected to attract the lion’s share of LPs’ capital allocations over the next 12 months.

Over half of LPs in the 2023 LP Survey (56 percent) say they favor North America as a region when considering the allocations they are due to make in the coming year. Over a quarter (27 percent) plan to allocate to managers in the U.K. and Europe.

Vision Ridge Partners, a general partner (GP) that invests across real assets and private equity, are targeting niche market disruption investment opportunities in both markets. The firm’s founder, Reuben Munger, said the firm will focus predominately on North American targets for now but is also seeing opportunities arise from the Ukraine conflict.

In terms of specific sectors LPs are turning to, Technology remains the main draw as 30 percent say this is where they would like to see managers invest. This is even though technology assets often lose their luster in times of higher inflation.


Though LPs are juggling several concerns as they continue to navigate the volatile markets in search for yield, they do see opportunities arise from the tumult. This is despite their worries about managing inflation and persistent interest rate rises amid a more challenging fundraising environment.

However, as LPs expect to funnel the largest portion of funds to North American fund managers, their risk appetite can be considered somewhat conservative, most likely driven by the uncertainty that still abounds.

Click here to download your copy of the 2023 SS&C Intralinks LP Survey.

Meghan McAlpine

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