Allocators plan to keep adding to alternatives while managing liquidity closely. In iConnections' Global Allocator Report 2026, 67% of surveyed allocators planned to increase alternatives, yet roughly three-quarters redeemed from at least one fund in 2025 and about one-quarter cited less liquidity than expected as a portfolio challenge. Liquidity terms belong in the investment case from the start.
Why are allocators redeeming while adding to alternatives?
The two findings sit together. In iConnections' Global Allocator Report 2026, 67% of surveyed allocators planned to increase alternatives in 2026 and 26% planned to maintain them. Only 2% planned a decrease, and 5% were unsure. [1]
The same survey records active pruning. Roughly three-quarters made at least one redemption in 2025. The report interprets this as recycling capital towards higher-conviction exposures; it does not observe the redeployment or measure net flows. [1]
Liquidity also ranks among the leading portfolio challenges in the report. The narrative identifies global macro risk at approximately 26% and less liquidity than expected at approximately 25%, followed by other tail risk at 17% and challenged performance at 14%. These figures support making liquidity a first-order question in any investment explanation. [1]
| Number of redemptions | Share of respondents |
|---|---|
| None | 25% |
| One to three | 56% |
| Four to six | 12% |
| 6+ | 7% |
Source: iConnections, Global Allocator Report 2026, pp. 56-57. Labels as printed; the bins overlap at six. The narrative gives approximately 74% making redemptions.
By origin, 44% of redemptions came from public-market funds, 23% from private-market funds and 33% from both. These are response shares, not shares of dollars withdrawn. [1]
The population matters. iConnections surveyed more than 500 investors in person at Global Alts Miami 2026. Family offices made up 44% of attending LPs, and 72% of LP attendees came from North America. The results describe surveyed allocators, not family offices alone. [1]
How much liquidity do family offices hold?
Citi Wealth's 2026/27 Global Family Office Report records 30% in public equities, 16% in fixed income and 12% in cash, excluding concentrated positions. Offices below $500 million hold 32% in cash and fixed income combined, against 25% for larger offices. Asia-Pacific offices hold 20% in cash. [2]
Cash intentions are mixed. Over the previous 12 months, 37% of respondents increased cash and 22% reduced it. For the next 12 months, 20% plan an increase and 26% a decrease, a published net reading of minus 6 points. [2]
A cash weight describes the surveyed population. It does not set a reserve level for any office.
How do new commitments affect cash planning?
Private-market commitments create obligations that arrive over time: capital calls first, then distributions whose timing depends on exits. Citi links the rising interest in secondaries to slower IPO exits; that link is the author's interpretation, not a measured cause. In Citi's survey, 30% of family offices plan to increase growth-equity fund commitments and 19% secondary-fund commitments. [2]
Borrowing also features in liquidity management. Among Citi respondents, 57% use securities-based lending or margin facilities, 30% commercial real-estate secured financing and 5% fund-level subscription or NAV financing; 26% use no leverage. Citi interprets these structures as liquidity and capital-efficiency tools. The survey does not show that leverage is conservative or suitable for every portfolio. [2]
What liquidity terms do allocators examine?
Illiquidity also shapes manager selection. In AIMA/Marex's Emerging Manager Survey 2026, 84% of investors cited style drift or excessive illiquidity as an allocation barrier. The category combines two concerns; it does not mean 84% reject illiquid assets. [3]
Concentration limits matter too. In the same survey, 26% cite an investment exceeding a permitted share of the fund's AUM, and 12% an investment exceeding their own hedge-fund threshold. [3]
A liquid underlying strategy does not establish the liquidity rights of its vehicle. Allocators confirm the terms directly:
- Commitment period, capital calls and expected distributions.
- Lockup, redemption frequency and notice period.
- Gates and transfer restrictions.
- Dependence on exits for any return of capital.
Our guide to CTA managed accounts explains how exit mechanics work in a separate account.
How do pension funds approach liquidity differently?
Pension funds manage liquidity against liabilities. In the Thinking Ahead Institute and Pensions & Investments Global Top 300 Pension Funds study, September 2026, defined-benefit plans account for 57.8% of disclosed AUM, defined-contribution 28.5%, reserve funds 12.8% and hybrid plans 0.9%. The data cover 277 funds representing 94% of ranked assets. [4]
The report links maturing pension systems with benefit payments, cash-flow planning and liquidity management. Defined-contribution assets grew 15.8% in 2025, against 9.4% for defined-benefit assets. A pension fund is not a family office with a larger portfolio; its liquidity decisions start from liabilities. [4]
Gnosis introduces institutional allocators to managers regulated in their home jurisdiction and evaluates them through Allocator IQ. It does not advise on allocations, manage assets, hold custody or execute orders.
Frequently asked questions
Are allocators cutting alternatives?
Not on the iConnections evidence. In its Global Allocator Report 2026, 67% of surveyed allocators planned to increase alternatives and 2% planned a decrease. Many also redeemed from individual funds in 2025, which the report reads as recycling capital towards higher-conviction exposures.
Does a liquid strategy mean a liquid investment?
No. The liquidity rights of a vehicle depend on its terms, including lockups, redemption frequency, notice periods and gates. A liquid underlying market does not establish them.
Is 12% cash a suitable reserve for a family office?
No figure in the survey sets a reserve. The 12% is the average cash weight reported in Citi Wealth's 2026/27 Global Family Office Report, excluding concentrated positions.
What liquidity challenges do allocators report?
In iConnections' Global Allocator Report 2026, about one-quarter of surveyed allocators cited less liquidity than expected as a portfolio challenge, close behind global macro risk at approximately 26%. The report does not tie the finding to any specific vehicle type.
Why do pension funds treat liquidity differently?
Defined-benefit plans, 57.8% of disclosed AUM in the Global Top 300 Pension Funds study, pay benefits against liabilities. Cash-flow planning follows from those obligations.
For institutional investors. This article provides general information, not investment, tax or legal advice or a recommendation of any manager, strategy or structure. Survey figures describe the stated populations and periods and do not indicate future allocations or results. Past performance is not necessarily indicative of future results.
Sources
- iConnections, Global Allocator Report 2026. In-person survey of more than 500 investors at Global Alts Miami 2026, alongside attendee and meeting data; each measure has its own population. pp. 12-15, 55-59.
- Citi Wealth, 2026/27 Global Family Office Report. Survey beginning June 2026 of 351 Citi Wealth family-office clients across 41 countries; allocation question excludes concentrated positions. pp. 23-26, 39-40, 50-53, 57-58, 63.
- AIMA/Marex, Emerging Manager Survey 2026. Investor sample of 50 respondents managing more than $429 billion; multiple responses allowed. p. 35.
- Thinking Ahead Institute / Pensions & Investments, Global Top 300 Pension Funds, September 2026. Mainly 2025 assets; plan-type data for 277 funds representing 94% of ranked AUM. pp. 5, 7, 36.