Blog

Based on Form D filings, private markets issuance has been reasonably flat in the past three years. In 2023, 15,157 funds were filed with the SEC; in 2024, 15,313; and 14,865 this year (so far).

There has been some variation at the category level, such as venture capital filings falling from approximately 6,500 in 2023 to 6,000 this year, and slow but steady growth in hedge funds (1,078 in 2023 to 1,294 so far this year) but all in all, despite the geopolitical and macroeconomic tumult of the past few years, issuance and capital raising at the aggregate private market level bas been fairly flat.

Switching gears to the Form ADV filings, however, and something quite noticeable sticks out: despite the relatively flat trajectory of private equity issuance over the last four years, as per Form Ds, there’s been a significant increase in the number of new private equity fund of funds reported on Form ADVs filed in 2025 (1,192) compared with 693 in 2024 and an aggregate gross asset value more than double that of last year (see Figure 1).

Figure 1: New Fund of Funds Reported, 2024-2025

Source: 9AT, IAPD

Arguably, it should not come as a surprise that the PE category rebounded in a more pronounced manner than the hedge fund and venture capital spaces. Reduced LP distributions from private equity strategies in recent years – thanks to the difficult exit environment reducing liquidity in the market – has meant that the PE category has borne the brunt of the pull back. Add to that the ‘higher for longer’ interest rate environment continuing to provide investors with attractive opportunities in liquid fixed income when compared with their private markets peers and it becomes clear why there was such a notable drop from 2023-2024 (Figure 2).

Figure 2: New Fund of Funds Reported, 2023-2024

Source: 9AT, IAPD

But, even removing 2024 from the analysis shows that the rebound in fundraising should perhaps be unsurprising purely from the perspective of delayed demand; now that liquidity is returning, LPs can redeploy faster (not to mention the desire to minimize holes across vintage years). And private debt is no longer the only game in town as yields are falling, and the asset class faces significant regulatory pressure on both sides of the Atlantic.

Figure 3: Average Size of Fund of Funds Reported, 2023, 2025

Source: 9AT, IAPD

Other interesting themes can be seen in private markets fund of fund land, particularly in venture capital circles. The number of new VC FoFs reported on Form ADVs filed in 2025 is more than double that of two years ago, but the aggregate GAV raised by these funds has fallen by almost 40%.

Subsequently, the average GAV has also fallen from $69.3m in 2023 to just $20.4m for new VC fund of funds reported on Form ADVs filed this year, in part due to first timers struggling to raise institutional capital as LPs continue to favor established, larger managers. But also, there are significant declines in the aggregate and average GAV of new private equity FoFs and new hedge fund of funds as well, despite the greater numbers.

The fund of fund cohort in the alternative investment market has been under pressure generally in the past decade or so, as investors have looked to more customized private markets portfolios. But, while the hedge fund, PE and venture categories grew both in terms of the number of funds managed and the aggregate assets from last year to this, a good chunk of that can likely be attributed to a lag.

Will the average fund size continue to shrink in the coming years? Time will tell. The recent past has certainly provided interesting times for the alternative investment market, and we’ll be keeping an eye out to see how the fund of fund space grows – or shrinks – in the coming months.

Editor's Picks:

Here are a handful of articles that we’ve seen recently that we found interesting. Hopefully, you do, too!

• Hedge funds double down using near-record leverage in quest to boost returns
• US leveraged loan default rate including LMEs slides to two-year low
• Buyout executive warns private equity push into US savings risks bailouts
• Investors Should Utilize Defensive Nature of Infrastructure Debt in Trying Times
• Why ‘hold forever’ investors are snapping up venture capital ‘zombies’