Institutional investors are signaling stronger appetite for alternative investments while becoming more selective about the technology used to manage private-market portfolios. Dynamo Software’s fifth annual survey of global limited partners (LPs) found that 63% plan to increase their alternative investment allocations over the next year, the highest level recorded in the five-year study. At the same time, LPs are prioritizing practical AI applications such as automated data extraction, portfolio monitoring and investment-document analysis.

LPs Turn to AI as Alternative Investment Allocations Rise

The private investment market is entering a period in which investment appetite and operational efficiency are becoming closely connected. Dynamo Software’s 2026 Frontline Insight Report, based on survey responses collected in July and August 2026, shows LPs increasing their planned exposure to alternative investments while placing greater emphasis on technology that can help existing teams handle growing workloads.

The survey’s strongest signal is investment allocation. Sixty-three percent of LP respondents said they plan to increase their allocations to alternatives during the coming year, up from 54% in 2025 and 55% in 2022. Dynamo describes the 2026 result as the highest reading recorded since the survey began.

Fund managers remain the primary channel for gaining alternative-investment exposure. Seventy-eight percent of respondents said they plan to use fund managers, while 64% intend to explore co-investments. The latter represents a five-year high and points toward continued interest in more direct participation alongside traditional fund structures.

The geographic picture is less uniform. More than half of respondents plan to allocate capital toward the U.S. and Canada, while Europe remains a significant destination. Asia, however, saw LP investment intent fall from 23% in 2025 to 12% in 2026.

Technology priorities provide another important part of the survey. For the first time, Dynamo asked LPs specifically which AI capabilities would be most valuable to their organizations. Automated extraction of data from manager reports, capital calls and notices emerged as the leading use case, followed by portfolio monitoring and anomaly detection and the summarization of investment memos, due-diligence materials and meeting notes.

These are relatively operational applications of AI rather than attempts to automate investment decisions. That distinction is increasingly relevant across financial services. AI can reduce the time required to locate, structure and interpret information without necessarily replacing the investment professionals responsible for judgment.

Dynamo’s findings reinforce that direction. Creating efficiencies and optimizing workflows became the respondents’ leading technology priority, moving ahead of cost considerations. Generative AI was also identified as the technology LPs most expected fund managers to invest in, followed by automation, hyperautomation and edge computing.

The shift could have implications for private-market technology vendors. Alternative investment firms typically handle large volumes of unstructured documents, including capital calls, investor notices, fund reports, due-diligence materials and investment memoranda. These workflows are well suited to technologies capable of extracting structured information from documents and surfacing exceptions.

But the survey also highlights where technology has yet to solve longstanding operational problems. Document and data management remained LPs’ biggest workflow pain point, with the share reporting poor performance in this area increasing from 16% to 20% year over year.

That creates a direct connection between the industry’s investment ambitions and its technology requirements. More alternative-investment activity can mean more managers, documents, reporting obligations and portfolio data for LP teams to process.

The findings also show that enthusiasm for AI does not translate equally across every technology category. LPs identified the metaverse and virtual reality as the most overhyped areas, cited by 53% of respondents, followed by cryptocurrencies and blockchain at 45%. Biotech and genomics registered the lowest level of perceived hype at 7%.

For investment firms, the emerging technology strategy therefore appears increasingly tied to measurable workflow improvements. Rather than treating AI as a broad transformation project, LPs are identifying specific processes where automation can reduce manual effort, improve information access and help existing teams manage increasingly complex alternative-investment operations.

Market Landscape

Alternative investments are placing greater demands on institutional investment operations as LPs evaluate private equity, private credit, real estate, infrastructure and other nontraditional asset classes.

Dynamo’s survey suggests that technology investment is increasingly being evaluated through an efficiency lens. The strongest AI use cases identified by LPs involve extracting information, monitoring portfolios and summarizing documents rather than replacing investment professionals.

That creates opportunities for AI-powered investment operations, alternative-investment software, document intelligence and portfolio-monitoring platforms. It also raises practical requirements around data accuracy, security, auditability and integration with existing investment-management systems.

The persistent dissatisfaction with document and data management is particularly relevant. As private-market allocations increase, LPs may need technology that can turn fragmented manager communications and investment documents into structured, usable data without creating additional reconciliation work.

Top Insights

• Sixty-three percent of surveyed LPs plan to increase alternative-investment allocations, marking the strongest result in Dynamo’s five-year research series.
• Automated extraction from manager reports, capital calls and notices ranked as LPs’ leading AI priority for improving investment operations.
• Co-investment interest reached a five-year peak, with 64% of respondents planning to explore direct investment approaches alongside traditional fund-manager relationships.
• Document and data management remains the largest operational pain point, with dissatisfaction increasing from 16% to 20% year over year.
• LP technology priorities are shifting toward workflow efficiency, with generative AI, automation and hyperautomation among technologies expected to receive greater investment.

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