ARTICLE
July 1, 2026
Read time: 4 min
As part of London Hot Topics 2026, Josh Dambacher and Lee Smith explored how investment managers are adapting to changing investor expectations through product innovation, customised solutions and alternative capital-raising strategies.
In an increasingly competitive fundraising environment, managers face a simple challenge: how do you stand out when capital is harder to secure and investors have more choice than ever?
The discussion highlighted a growing trend across the industry. Increasingly, successful fundraising is not simply about performance. It is about alignment.
Managers that understand investor needs and are willing to adapt their product offering accordingly are often finding greater success in attracting and retaining capital.
Investor expectations are changing
Today’s investors are looking for more than attractive returns.
They are increasingly seeking:
- Greater flexibility
- Enhanced transparency
- More tailored investment solutions
- Better alignment with their specific objectives
As a result, conversations are moving beyond traditional discussions around fees and liquidity.
Investors are increasingly engaging with managers on product design, governance and portfolio construction, influencing how investment products are structured and delivered.
Product innovation is accelerating
One of the clearest themes from the discussion was the increasing willingness of managers to develop products around their highest-conviction investment ideas.
A notable example is the growing interest in dislocation funds.
Designed to capitalise on periods of market disruption, these vehicles seek to address some of the challenges managers have historically faced during periods of stress, including redemption pressure and limited access to capital.
More broadly, managers are increasingly developing structures that provide greater flexibility while preserving their ability to execute investment strategies effectively.
As market conditions continue to evolve, product innovation is becoming a key tool in differentiating investment offerings.
Customisation is becoming mainstream
Alongside the creation of entirely new products, managers are increasingly looking for ways to customise existing offerings.
Side letters continue to grow in both volume and complexity as investors seek bespoke arrangements covering areas such as:
- Transparency
- Expense allocations
- Tax considerations
- Portfolio exclusions
At the same time, managers are making greater use of customised share classes to accommodate different investor requirements without fundamentally altering the core investment strategy.
This trend reflects a broader shift towards providing investors with greater choice while maintaining operational efficiency.
New sources of capital are emerging
The discussion also highlighted growing interest in alternative investor channels.
Managers are increasingly exploring opportunities to access:
- Family offices
- Private wealth platforms
- Seed and acceleration capital providers
For many managers, these sources of capital offer an opportunity to diversify investor bases and reduce reliance on traditional institutional allocators.
At the same time, expanding into these markets requires careful consideration of marketing strategies, operational processes and investor onboarding requirements.
The ability to access new pools of capital is becoming an increasingly important component of growth strategies.
Alignment builds confidence
Ultimately, the discussion returned repeatedly to a simple principle: alignment builds confidence.
Investors are more likely to allocate capital, increase commitments and maintain long-term relationships when they believe that managers understand and support their objectives.
In a more challenging fundraising environment, alignment is no longer simply a relationship-management tool. It is becoming a strategic advantage.
Managers that successfully balance innovation, flexibility and operational discipline are increasingly distinguishing themselves from their competitors.
Looking ahead
Fundraising conditions may remain challenging, particularly in Europe, but the opportunities for growth remain significant.
As investor expectations continue to evolve, managers that embrace product innovation, customisation and new capital sources are likely to be best positioned to attract and retain capital.
The future may belong not necessarily to those with the simplest offerings, but to those that can most effectively align their strategies with the needs of their investors.
Continue the conversation
If you would like to discuss any of the issues highlighted above, please reach out to Josh Dambacher, Lee Smith or your usual McDermott contact.
