Company investor relations teams want stable, long-term shareholders. Funds known for 5-10 year holding periods become preferred partners for management, providing deeper insights and a research edge unavailable to short-term hedge funds or index funds.

Many LPs focus solely on backing the 'best people.' However, a manager's chosen strategy and market (the 'neighborhood') is a more critical determinant of success. A brilliant manager playing a difficult game may underperform a good manager in a structurally advantaged area.

The dominance of low-cost index funds means active managers cannot compete in liquid, efficient markets. Survival depends on creating strategies in areas Vanguard can't easily replicate, such as illiquid micro-caps, niche geographies, or complex sectors that require specialized data and analysis.

Exposing the enormous fees paid to external managers forces asset owner boards to ask, "Is there another way?" This transparency is the key driver that prompts them to consider the strategic benefits of building internal investment teams.

For a multi-trillion dollar manager, agility isn't about small trades but leveraging scale for superior market access and research. The key is acting early to identify risks or opportunities before liquidity dries up, effectively using information advantages to front-run market stress.

Crescent Asset Management's core investment philosophy is to use public markets for cheap, passive beta exposure. They concentrate their active management efforts on private markets, where they believe an informational and access-based edge can be used to generate true alpha.

The best investment opportunities are often with managers who have strong demand and don't need any single LP's capital. The allocator's core challenge is proving their value to gain access. Conversely, managers who are too eager to negotiate on terms may be a negative signal of quality or demand.

For private market giants, the key differentiator isn't assets under management, but the ability to create proprietary investment opportunities. Apollo has built 16 internal "origination engines" in niche areas like fleet and consumer finance to generate unique alpha for its clients.

In a world of high valuations and compressed returns, LPs can no longer be passive allocators. They must build capabilities for real-time portfolio management, actively buying and selling fund positions based on data-driven views of relative value and liquidity. This active management is a new source of LP alpha.