Core Alternative Managers’ Mood Index
Q4 2024 | Gen II
CAMMI is an index of the prevailing direction of fundraising and deployment trends in private equity, real assets and private credit.
Internal challenges fund managers expect to face in 2025
Obstacles to growth in the alternatives space in 2025
Most attractive fund domiciles for alternatives in 2025
Key topics for investors during fundraising due diligence in 2025
Fund Managers’ Operating Models and Future Use of Fund Administrators in 2025
Our survey respondents
Core Alternative Managers’ Mood Index (CAMMI)Headline score: 56.61
Meaning: alternative fund managers in the UK and Europe expect to continue deploying capital in their core strategies as well as increase diversification.
Data gathered between September 2nd and October 7th 2024.
CAMMI is an index of the prevailing direction of fundraising and deployment trends in private equity, real assets and private credit. It consists of a diffusion index that summarises whether appetite for each sub-asset class, as viewed by fund managers, is increasing, staying the same, or decreasing.
The headline CAMMI is a number from 0 to 100. A CAMMI score above 50 represents an expected allocation increase by the LP Community, whilst a score under 50 represents an allocation decrease and a reading at 50 indicates no change. The further away from 50 the greater the level of change:
For example, a score of 71 on the index would indicate a strong level of agreement among respondents that the appetite for a particular sub-asset class is increasing. In turn, a score of 31 would suggest there is a high level of consensus among respondents that appetite for the relevant asset class is set to drop.
The purpose of CAMMI is to provide information about the current and future sentiment towards private equity and its sub-asset classes. The report also sets out other key trends within the world of private capital.
Alex Di SantoHead of Private Equity, Europe, Gen II
Dear Readers,
I am pleased to introduce the latest Core Alternative Managers' Mood Index (CAMMI) result and white paper, which explores the current state and future trends of private equity, real assets and private credit. The data, gathered from fund managers across the UK and Europe between September and October 2024, provides a unique insight into the outlook for private capital over the next 12 months.
With a headline CAMMI score of 56.61, this report reflects a cautiously optimistic view among fund managers in respect of private equity fundraising. Notably, venture capital emerged as the leading asset class, with a CAMMI score of 59.05, indicating strong momentum and renewed confidence in early-stage investments, particularly in technology and innovation sectors. Real assets and private credit are also expected to grow, showing recoveries from prior contractions, while private equity strategies like growth capital and buyouts continue to attract significant interest, albeit at a more measured pace.
The survey also reveals key diversification trends. Many fund managers are diversifying into sectors where they see more resilience and growth potential. Strategies with safer returns are a central focus, with managers seeking to maintain growth ambitions by diversifying into sectors offering better risk-adjusted returns. This shift is often driven by the need to adapt to a changing market, as well as a desire to enhance competitive edge and capitalize on growth opportunities in growing areas such as infrastructure, technology, and climate tech.
Many fund managers are diversifying into sectors where they see more resilience and growth potential.
Finally, fund managers highlighted ongoing challenges such as talent acquisition/retention, adapting to technological advancements and managing operational efficiency. Regarding performance, nearly half of the fund managers surveyed reported that their portfolios either met or exceeded their performance expectations, reflecting the resilience of the private capital markets in navigating volatility.
At Gen II, we are committed to supporting fund managers in their growth ambitions in an increasingly complex and challenging market. We hope that this white paper offers valuable insights into the current market landscape and serves as a useful resource for your strategic planning in 2025.
Thank you for your continued trust and partnership. We look forward to working together as the private capital markets continue to evolve and grow.
Sincerely,
The CAMMI results present a cautiously optimistic outlook for private capital markets over the next 12 months. With a headline score of 56.61, the survey of 122 fund managers across the UK and Europe indicates a continued optimism across the key asset classes such as private equity, venture capital, real assets and private credit. Private capital fund managers are adjusting to market volatility and economic uncertainty by adapting the way they operate as well as repositioning and diversifying their business to capitalise on new growth opportunities.
Private Equity Strategies, interest in capital and buyouts, remain strong with continued LP interest. However, fund managers do anticipate fundraising to be at a slower pace than recent years due to heightened competition and consolidation with large players.
Venture Capital is expected to continue to attract significant interest with a CAMMI score of 59.05, rebounding strongly from a previous contraction. This reflects a growing confidence in early-stage innovation-driven investments, particularly in sectors such as technology and AI.
Real Assets follow with a CAMMI score of 58.87, driven by lower interest rates and increasing institutional demand for inflation-hedged assets such as infrastructure and real estate.
Private Credit shows a CAMMI score of 55.83, signalling a recovery from previous contractions as traditional lenders withdraw, but growth is expected to moderate as interest rates stabilise.
Fund managers are adopting balanced, measured strategies in 2024/2025, navigating economic headwinds and pursuing opportunities in less risky growth sectors.
Allocations across private capital asset classes are on the rise, with the latest Core Alternative Managers’ Mood Index (CAMMI) score climbing to 56.61 in September 2024, from 42.37 the previous September.
This paints a picture of cautious optimism in private capital asset classes. Fund managers are expecting LPs to moderately increase allocations across private equity, venture capital and debt, private credit and real assets over the next 12-months, albeit at different paces, suggesting a recovery from recent headwinds and a carefully positive outlook.
Overall cautious optimism: The headline CAMMI of 56.61 indicates moderate expansion in private market allocations.
Venture capital leads: With the highest CAMMI score of 59.05, Venture Capital shows the strongest momentum, rebounding from previous contraction.
Real assets, venture debt, secondaries and fund of funds gain momentum: These asset classes are expected to grow over the coming months, rising from a negative or neutral sentiment position last year.
Buyout remains strong, but sentiment is softening: Fund managers plan to increase growth capital and buyout allocations, though enthusiasm has tapered compared to last year.
Measured allocation strategies: Fund managers are cautiously optimistic, with 40% expecting increased LP allocations, 33% expecting little change and 27% expecting LP allocation reductions, reflecting a balanced approach.
Portfolio performance aligns with cautious sentiment: Nearly half of fund managers (48.4%) feel their portfolio met or exceeded expectations, while 49.2% thought their portfolio only partially met expectations.
Increase
Decrease
Keep the same
Undecided
Fig 1: Fund Managers answer
Expectation
Response (%)
Has not met
2
Partly met
49
Met
34
Exceeded
13
The past 12 months presented a mixed but generally positive picture for portfolio performance in private capital markets.
While only 13.7% of managers reported portfolios exceeding their expectations, combining this figure with those whose portfolios met expectations (34.7%) reveals that nearly half (48.4%) of fund managers saw satisfactory or above performance results. This shows that, despite challenging market conditions, almost half of the respondents achieved their performance goals.
On the other hand, the largest group, 49.2%, indicated their portfolios only partly met expectations. This suggests that while performance was not wholly disappointing, many managers are still facing challenges in reaching their performance expectations.
Notably, only 2.4% of managers reported their portfolios had not met expectations.
This distribution indicates that while there is broad resilience in the market, fund managers are adjusting their outlooks and strategies carefully, seeking to balance opportunity with risk as they move into the next year.
Fig 2:
Asset Class
Expected allocation increase (%)
No change (%)
Expected allocation decrease (%)
Total (%)
CAMMI Index Score (Sep '24)
Allocation Direction
Pace of change
Venture Capital
43
32
25
100
59.05
Increasing
From contraction
Venture Debt
39
35
26
56.13
From no growth
Growth Capital
40
57.14
Slowing
Buyout
36
55.19
Real Assets
44
29
27
58.87
Private credit
33
28
55.83
Secondary/Fund of Funds
52.41
Overall sentiment to private capital markets
56.61
Real estate and infrastructure also witnessed a significant rise, with a CAMMI of 58.87. Almost half (43%) of fund managers in the space expect continued growth in real assets, whilst 27% expect a potential decrease in activity through 2025.
“Our latest CAMMI survey data shows that interest rate cuts with low to moderate inflation have been making real estate more attractive. With major economies expected to hold or lower rates further in the coming year, we see fund managers expecting more opportunities within real assets and institutional investors committing to deals more quickly than they have been in the past year.”
Mixed economic growth forecasts have been driving investors towards stable assets in stronger regions whilst some investors are looking to other regions as good value. Currency fluctuations, demographic shifts and increasing focus on sustainability have been influencing investment decisions across various property types in the past few years and this is likely to continue into 2025.
Whilst factors affecting last year’s survey in 2023 included technological disruption reshaping demand for retail, office spaces and logistics, this year there is more focus on how these are leading to new opportunities, especially in reimagined office layouts and strategically located logistics facilities. Demographic changes, such as aging populations, are boosting demand for specialised real estate like healthcare facilities and senior living communities, whilst some managers are pursuing value-add strategies through green retrofitting and development of environmentally friendly properties.
Further, with many economies experiencing a shortage of housing, fund managers are increasingly turning their attention to the residential sector driven by opportunities following from increased urbanisation, rising rents and policy initiatives aimed at addressing housing supply constraints.
This dynamic is creating opportunities for both core and opportunistic strategies, as managers look to bridge the supply-demand gap and capture long-term value in the housing market.
Within the UK specifically, there is hope amongst real estate managers that the recently elected government can break the deadlock in planning laws and bring a bigger land supply to help with the issues facing the residential market there.
Globally, geopolitical uncertainties persist and with it supply chain issues. Whilst this has created price inflation across most industries, including the cost of construction materials, it has also brought some opportunities.
Specifically, the focus on reconfiguring global supply chains has been driving demand for industrial assets in key locations around the world. Meanwhile, high prices in prime markets are still pushing some investors to explore secondary cities and alternative sectors for better yields.
“The resilience of real assets during economic uncertainty, coupled with their renewed potential for stable cash flows and long-term appreciation, could make them particularly appealing to investors into the next year. As we see rates being lowered, this will more strongly become the case. According to our CAMMI data, real estate fund managers believe the asset class is gaining momentum now and it’s likely to last through most of 2025.”
According to our CAMMI data, buyout fundraising continues to be popular but slowing.
September 2023’s CAMMI scores showed very strong interest in Growth Capital (66.67) and Buyout (57.14), expecting increased and somewhat increased allocations to these two asset classes through 2024 respectively.
According to Preqin data for 2024, this is indeed what happened: private equity buyout strategies had a strong start to the year in Europe, according to Preqin’s Alternatives in Europe 2024 report. Preqin says European private equity fundraising surged to €118bn in the first half of the year, setting the stage for a potential record of €236bn by year-end. This performance is particularly noteworthy given the broader economic backdrop, where macroeconomic uncertainty and fluctuating interest rates created a mixed picture for capital deployment.
Despite the positive sentiment in 2023 and the potential record-breaking fundraising year that 2024 shaped up to be, both Gen II’s CAMMI data and Preqin’s forecasts for the remainder of 2024 expect allocations into private equity buyout strategies to decelerate.
"One reason for the potential slowdown is the increased consolidation of some LPs with well established mega-funds - the overall number of funds is decreasing but AUM is not. However, despite this trend we do continue to see more focused and niche strategies with smaller, specialised players capturing some market share.”
According to the latest CAMMI data both growth capital and buyout strategies continue to be at the core of the private equity landscape….but fundraising is expected to slow.
Europe’s private equity market is continuing to attract significant capital, with venture capital and growth sectors benefiting from the global appetite for innovation. While buyouts remain strong, fundraising is increasingly competitive and challenging.
Preqin data highlights that Europe’s private equity market also holds a strategic advantage over North America due to its exposure to lower-risk asset classes such as private credit and infrastructure. Private credit represents 15.3% of Europe’s private capital AUM, while infrastructure accounts for 18.9%, significantly higher than their respective shares in North America. This diversified exposure provides European markets with a buffer against some of the volatility typically associated with higher-risk growth investments, enhancing the region’s appeal.
In addition to traditional buyouts and growth strategies, there has been a notable increase in open-ended and evergreen fund structures to enhance access to alternative investments for high-net-worth individuals. The growing popularity of European Long-term Investment Funds (ELTIFs) and the UK’s Long-term Asset Funds (LTAFs) underscores this trend.
As of August 2024, 125 ELTIFs had launched across Europe, with the majority domiciled in Luxembourg. These vehicles offer retail investors access to long-term private market investments, further diversifying the investor base and providing private equity firms with a broader capital pool.
Alex Di Santo continued, “Despite the worry of a potential slowdown in the second half of the year, Europe’s private equity market remains in a strong position. The region’s diverse investment strategies, supported by a balance of higher-risk growth investments and lower-risk alternatives like infrastructure and private credit, continue to attract global capital. While the pace of fundraising may fluctuate, the long-term outlook for private equity in Europe remains robust, particularly as fund managers adapt to shifting market dynamics and capitalise on new and emerging opportunities.”
Looking ahead to 2025, CAMMI readings suggest that growth capital, buyouts and venture capital will remain key areas of focus, but with varying levels of momentum. .
Fund managers are expecting venture capital to experience a resurgence in Europe, with the CAMMI reading for the asset class standing at 59.05 - the highest among private equity asset classes. This indicates recovering momentum after a period of contraction, when the CAMMI score was just 33.33 for 2023.
The renewed optimism is reflected in respondent sentiment, with 43% of managers looking at the asset class said they expect increased LP allocations, while only 25% expect a decrease.
This shift reflects renewed confidence in early-stage investments, with investors increasingly drawn to the innovation and growth potential of European startups. Nordic-based managers have been particularly successful, raising more capital in the first half of 2024 than in any previous full year.
Artificial intelligence is expected to be a key driver of this growth, with Preqin forecasting annualised AUM growth of 13.2% for early-stage venture capital from end-2023 to 2029. General venture capital is also projected to perform well, with an 11.1% annualized AUM growth rate. However, late-stage venture capital is expected to grow more slowly at 8.1%, potentially hampered by a challenging exit environment, asset valuation pressures, and increased regulatory scrutiny of mergers and acquisitions.
Historic performance against targets has varied by asset class. Preqin data shows that private debt funds with 2018-2021 vintages outperformed managers' expectations, benefiting from tighter credit conditions driven by post-pandemic contractionary monetary policy. In contrast, venture capital funds from similar vintages underperformed their targets, facing ongoing valuation pressures.
Di Santo said, “While the current CAMMI data and future projections paint an optimistic picture, particularly for early-stage and AI-focused investments, managers and investors should remain mindful of the potential challenges, especially in the late-stage segment and when considering exit strategies.”
The strong CAMMI reading for venture capital, together with the projected growth in AI-related investments, suggests that despite recent underperformance, many fund managers see significant opportunities in this space. This optimism, however, is tempered by an awareness of the sector's volatility and the need for strategic approaches to navigate the evolving landscape of innovation and regulation.
Private credit is on the rise, with a CAMMI score of 55.83 signalling expansion after a period of contraction. Alex Di Santo noted,
The current environment is opening up opportunities for private credit to meet the demand for capital, especially as traditional lenders continue to pull back.
There is a continued belief that private credit presents a significant opportunity to LPs in a difficult market. Di Santo explained, "Fund managers are increasingly diversifying into private credit which can often offer a less risky investment opportunity."
Despite some fundraising challenges, CAMMI's current reading of 55.83 suggests a positive, yet measured, outlook for private credit. The pace of expansion may be moderated as interest rates fall, prompting strategy recalibrations. Nonetheless, private credit is expected to continue playing a vital role in filling financing gaps left by traditional lenders, especially during economic uncertainty.
Preqin's long-term outlook for private credit remains strong, forecasting improved performance across the sector.
The average internal rate of return (IRR) for private credit is expected to rise from 8.1% (2017-2023) to 12.0% (2023-2029). Distressed debt strategies are projected to lead with an even stronger average IRR of 13.4%. However, as the global economy stabilises, the performance gap between distressed debt and broader private credit strategies is expected to narrow.
Venture debt continues to expand, albeit at a measured pace. The latest CAMMI score of 56.13 for venture debt suggests a balanced outlook, with investors adopting a cautiously optimistic stance.
The first half of 2024 has seen a significant uptick in venture debt funding for European start-ups, with €18.7 billion raised according to Sifted data. If this trend continues, 2024 could set a new record for venture debt in Europe.
Mark Collins (Head of PE Jersey at Gen II) says, “Venture debt’s uptick comes at a time when equity funding has been more constrained, highlighting the growing importance of debt instruments in the start-up ecosystem. While the tech sector is showing signs of recovery, it's a gradual process rather than a dramatic rebound. Companies, particularly at Series B and beyond, are facing heightened scrutiny from fund managers, who are focusing on top performers in each sector.”
Several factors are contributing to the growing interest in venture debt. Companies are increasingly turning to debt to strengthen their balance sheets and extend their financial runways, particularly in the current economic climate. For larger startups, especially those at Series C and beyond, debt is being used to fund acquisition strategies, with many setting up "hunting lines" for potential M&A activity. Certain sectors, such as climate tech, have become especially appealing for venture debt, while fintech is also experiencing a resurgence. Additionally, the European market for venture debt is maturing, with more startups openly considering debt as a financing option, though it remains less common than in the US.
Looking ahead, the venture debt market's trajectory appears closely tied to interest rate movements. "Any shift in interest rates could unlock further activity across M&A, equity and debt deals,” said Mark Collins.
The current CAMMI score of 56.13 for venture debt, combined with the record-setting pace of debt funding, paints a picture of a sector that's gaining momentum while maintaining a degree of caution.
As the year progresses, we will watch how this balance evolves, particularly in light of potential interest rate changes and their impact on the broader start-up funding ecosystem.
The secondaries market within private equity is currently marked by a blend of cautious sentiment and long-term growth potential, underscored by emerging technological innovations. According to the latest CAMMI score, secondaries along with fund of funds exhibit the weakest momentum among private equity strategies, with a score of 52.41. This signals a conservative approach to these often-cyclical strategies, despite their potential for enhancing portfolio management and liquidity.
In contrast to this short-term caution, long-term projections paint a much more optimistic picture. Industry predictions for the secondaries market is that it will expand significantly, with an expected annualised growth rate of 13.1% from 2023 to 2029, positioning secondaries as one of the fastest-growing segments within the alternatives space. This outpaces the broader private equity market, which is forecasted to quickly increase its assets under management (AUM) by 2029. Current market conditions reflect this mixed sentiment. In the first half of 2024, average pricing for secondaries across all asset classes stood at 86% of net asset value (NAV), a slight decline from the decade-long average of 87.5%.
One of the most significant developments shaping the future of secondaries is the rise of tokenisation. This process, which converts private equity holdings into digital securities on blockchain, offers several advantages, including easier redemption, simplified paperwork and improved accessibility for new investors. Tokenisation is set to transform how investors engage with private markets, making secondaries more approachable for those new to the space.
Recent examples of tokenisation in action include Hamilton Lane's $5.6 billion Secondary Fund VI, which was made available to individual investors through a tokenised feeder fund, and Investcorp's GP stake fund.
Looking ahead, despite the cautious tone reflected in the current CAMMI score, the long-term outlook for secondaries is robust. The integration of digital tools like tokenisation is likely to attract new capital.
Recent data reveals that risk management and market conditions are driving the majority of diversification efforts, accounting for 26.9% and 19.2% of comments from surveyed managers, respectively. This trend reflects a broader need to adapt to uncertainties, particularly as global markets continue to experience fluctuations in economic conditions and asset performance.
Risk management and market conditions are the primary drivers of diversification efforts among fund managers, accounting for 26.9% and 19.2% of responses respectively.
Growth is a significant motivation for diversification, cited by 19.2% of respondents, with managers seeking to capitalize on new opportunities and expand into emerging sectors.
Resilience and stability is seen as the end goal of diversification, with 15.4% of comments focusing on its role in buffering against market volatility and enhancing long-term stability.
Investors are influencing fund manager diversification decisions, with 11.5% of comments noting that investor needs are shaping their strategies.
Lower returns are pushing some fund managers to take on extra risk and explore diversification beyond their core strategies.
Fund managers are increasingly turning to diversification as a key tool to mitigate risk and capitalise on growth opportunities.
Fig 2: Fund managers who are diversifying away from their core strategy explain why
Reasons for diversification
Responses (%)
Risk management / mitigation
Volatility / market conditions
19
Growth
Diversification
15
Customer driven
12
Operational efficiency
8
One anonymous fund manager commented on the driving forces behind their diversification efforts:
It’s driven by the need to adapt to a changing market, enhance our competitive edge, and capitalise on growth opportunities.
This sentiment resonates across the industry, where diversification is seen not only as a defensive move but also as a strategic one to seize opportunities in emerging sectors or underexplored asset classes.
In fact, growth was cited as a primary driver for diversification in 19.2% of responses, with fund managers keen to leverage expanding markets and resource utilisation. As one manager put it, “We wish to change things up, give our competitors a shock and fuel our markets." This reflects the proactive stance many firms are taking to stay ahead of market shifts, investing in areas that promise higher margins and potential expansion.
Alex Di Santo said, “Diversification is not solely about chasing new growth opportunities; for many, it is also about building resilience.” Around 15.4% of the comments related to diversification focused on the need for diversification as a strategy to buffer against market volatility and enhance long-term stability.
As one manager remarked, “We are currently trying to invest in a wider portfolio to protect our business," a view shared by others who emphasised the importance of shielding their portfolios from external economic shocks. This is particularly relevant in a market environment where lower returns are leading some firms to take on extra risk to meet performance targets.
One fund manager highlighted that “lower returns are making us take on extra risk,” showing how market conditions are forcing some managers to diversify beyond their traditional core strategies, even if that means stepping outside of familiar asset classes.
Another key theme emerging from the data is the influence of investor needs on diversification decisions. Around 11.5% of comments noted that customer demands are playing a significant role in shaping diversification strategies. As one respondent stated, “We are [one of the largest global players] and we are driven by our customers' needs.”
Alex continued, “Institutional clients are increasingly seeking more diverse portfolios, with additional risk-return profiles tailored to meet specific financial objectives. By offering a broader selection of products, fund managers are catering to these evolving investor demands, providing them with greater choice and more tailored strategies.”
While diversification efforts are largely framed around growth and risk mitigation, 7.7% of respondents also pointed to operational efficiency as a critical factor. One manager noted that “operating costs are becoming more expensive,” prompting firms to diversify in ways that enhance internal operations and maintain competitive margins. Additionally, market trends are clearly influencing diversification decisions, as some managers aim to “follow trends and perceived fluctuations” to stay ahead of the curve.
The survey responses clearly indicate that fund managers are increasingly viewing diversification as essential for both resilience and growth. With market volatility, lower returns, and evolving client demands shaping the current financial landscape, diversification will likely continue to play a central role in shaping investment strategies. As one fund manager succinctly put it,
To mitigate risk, we’re diversifying away from real estate and exploring new products to offer more versatile solutions.
Michael Johnson said, “Ultimately, fund managers are finding that diversifying their portfolios not only helps in managing risk but also positions them to adapt quickly to market shifts and investor needs. Whether motivated by the current economic situation or long-term expansion plans, the growing emphasis on diversification suggests that firms are preparing for a future where flexibility and adaptability will be key to maintaining a competitive edge.”
