The Great Alternative Investments Pivot: Why Are LPs Looking Beyond North America?

After years of U.S. market dominance in alternative investments, our latest research indicates a profound change for alternative investments: limited partners (LPs) are fundamentally rethinking their desired investment strategies for the year ahead.

Our tenth annual 2026 LP Survey Report, conducted with insights from over 280 institutional investors worldwide, reveals that the U.K. and Europe are now the investment destination of choice for LPs, taking North America’s crown.

Just 12 months ago, three-quarters of investors surveyed said they favored North American markets. Today, that share has plummeted to just 50 percent. By comparison, European markets were the stated preference by 54 percent of the LPs we surveyed.

The U.K. and Europe’s share of investor preference hasn’t necessarily risen considerably year-on-year — 49 percent of LPs said they sought U.K. and Europe exposure in last year’s study — but the data reveals a sharp decline in preference for North America-focused investments.

The likely culprit is heightened market uncertainty that has emerged over the past 12 months. President Trump's tariff threats and the specter of renewed trade wars have spooked investors who once viewed U.S. markets as a safe haven. The market shock of April 2025 underscored how quickly sentiment can shift, with nearly one-third of LPs now expressing concern over possible equity market contraction.

"With the ongoing elevated geopolitical risk structurally, and the range of risks and scenarios and uncertainties, it just drives investors to look for various ways to spread their investments to reduce correlation," says Matt Gertken of BCA Research in this year’s report.

This flight to diversification is perhaps the defining characteristic of today's LP mindset.

Portfolio performance emerges as the silver lining

Despite the geographic pivot and increasing concerns over inflation, interest rates and the broader geopolitical climate, there is reason for optimism among general partners (GPs) in the alternatives space.

After last year’s subdued outlook on portfolio performance, 2025 saw GPs widely deliver on LPs’ expectations. Nearly two-thirds (60 percent) reported portfolio performance that exceeded expectations, a sharp rise from just 16 percent in 2024.

Meanwhile, private equity has extended its strong run, with 36 percent of LPs citing it as the best-performing asset class for risk-adjusted returns. At the same time, emerging alternatives are gaining notable traction in the market. Digital assets and private credit are no longer niche plays, but have become core components of sophisticated portfolios, driven by both attractive returns and the need for diversification.

A new era for LP-GP relationships

Amidst these shifts, one trend stands out as unequivocally positive: LP-GP relationships have perhaps never been healthier. LPs were nearly unanimously positive about the relationships they hold with GPs, with 93 percent describing these relationships as "good" or "excellent," leading three-quarters to plan on increasing their GP relationships over the coming year.

This renaissance in relationships is no accident. It has been built on improved transparency and more consistent fund reporting, with just over one-third (38 percent) of LPs now rating GP transparency as “excellent.”

Furthermore, LPs appear to be abundantly satisfied with how their GPs have embraced technology, particularly artificial intelligence (AI), which has evolved from a potential game changer to a must-have capability in just a few years. A majority of LPs now see the technology as transformative for portfolio management.

In 2026, one message is clear: the only certainty is uncertainty, and adaptability will be prioritized. Fund managers who can demonstrate geographic flexibility, embrace emerging asset classes and leverage AI-powered technologies while maintaining the highest standards of transparency will thrive in this new environment.