Continuation Funds in 2026: Performance and LP Profile

This is the third blog in our Continuation Funds in 2026 series. The first blog, on the growth of these funds since 2018, can be viewed here and the second, on deals and portfolio companies, here

Performance

David Dawkins with Rmakaant Nangroo

Continuation fund (CF) performance data shows that, from 2020 onwards, median IRRs for CFs are competitive when viewed alongside the highest-performing private equity funds captured by Preqin.

In 2023, the CF IRR of 28% exceeded all private capital, US buyouts, and even top-quartile private equity (Fig. 13). This data point supports the argument that any hold-period extension of a chosen portfolio company is not value-deferral but value-creation.

CFs formed in 2018 also give us the first opportunity to see – through the distribution data – how the concept is faring against the reality of current market conditions.

Fig. 13: CF performance as viewed alongside US buyouts and top-quartile private equity 
Median IRR of benchmarked continuation funds, US buyouts, all private capital, and top-quartile private equity (%)

_{IRRs are not shown for funds within the first three years of their lifecycle, as it is deemed too early for IRRs to be meaningful.
Source: Preqin Pro. Data as of April 2026}

In 2018, CFs returned 2.14x capital via distributions, compared with 0.64x for US buyouts, 0.58x for top-quartile private equity, and 0.57x for all private capital (Fig. 14).

However, no distributions have occurred for 2023–2025 vintages across CFs, US buyouts, top-quartile private equity, and all private capital – confirming a market-wide liquidity freeze affecting many market participants.

Fig. 14: CFs are not immune to the liquidity cold snap 
Continuation fund TVPI, DPI, and IRR compared with US buyouts, top-quartile private equity, and all private capital (%)

Continuation funds

US buyouts

Top-quartile private equity

All private capital

_{Source: Preqin Pro. Data as of April 2026}

The data in Fig. 14 also tests the central ‘jewel in the crown’ thesis that informs how CFs are presented to LPs. For the LP, the question 'should I roll into the CF or let the original fund hold the asset?' has a real performance answer. In the vintages where the comparison is meaningful (2018–2021), the more mature origin (parent) fund outperforms the newer CF on IRR – reflecting the parent’s already-realized returns. This gap should narrow as the CF's portfolio companies mature and value is crystallized.

The data is filling in the gaps with each year that passes, but LPs should expect capital calls to outpace distributions for at least three to four years, while data becomes available on the types of portfolio companies that best suit CF timeframes and the managers best suited to steer these funds.

LPs in motion

David Dawkins with Alfie Finch-Critchley

From the data available, an LP profile is emerging of those most likely to back a continuation fund rather than taking the money offered.

As of April 2026, around 56% of continuation fund investors tracked by Preqin come from pension funds (public and private), and foundations and endowments (Fig. 15). Although pensions and foundations are more consistent in disclosing their exposure, data suggests that CFs, by their very nature, are increasingly relevant to liability-driven and endowment-style portfolios.

Fig. 15: Over half of CF investors tracked by Preqin come from pension funds and foundations 
Investors in continuation funds by LP type

_{*Government agency includes sovereign wealth funds. Other includes banks, fund managers, superannuation schemes, private equity firms, and investment companies.
Source: Preqin Pro. Data as of April 2026}

The regional breakdown shows another layer of concentration. LPs based in the Americas make up 67.4% of the disclosed CF investor base, compared with 26.4% in EMEA and only 6.2% in APAC (Fig. 16) – mirroring where CF GPs are currently based (see Fig. 9 and 10 in our second blog on deals and portfolio companies).

Fig. 16: Nearly 70% of all LPs with exposure to CFs tracked by Preqin are based in the Americas 
Investors in continuation funds by region

_{Source: Preqin Pro. Data as of April 2026}

However, LPs who have committed to CFs are currently a small and distinct subset of Preqin’s known LP universe, at around 2%. With a broader-than-typical appetite for illiquidity, these LPs carry industry exposure significantly wider than the all-LP baseline (Fig. 17).

This suggests, very broadly, that CF’s growth story since 2018 has been driven by a cohort of early adopters with significant experience in familiar private capital regions and industries.

Fig. 17: CF-committed LPs tracked by Preqin cover all industries at materially higher rates than the consolidated pool of all LPs 
All LPs vs. LPs committed to continuation funds: industry preferences

_{Source: Preqin Pro. Data as of April 2026}

Over the next three to five years, the data will catch up with the capital. As CF vintage data deepens and standardized reporting has more effect, LPs and their platforms will be able to model CFs not as one-off decisions but as recurring portfolio exposures – with measurable impacts on duration, concentration, and liquidity.

That shift is likely to define the next chapter for continuation funds globally.

Key questions for LPs

What key questions should LPs ask before rolling into a continuation fund?

Before rolling, LPs should re-underwrite both the asset and the opportunity in portfolio terms. Key questions include whether the pricing is well supported, whether the economics are appropriate for the next phase of ownership, what reporting and oversight will apply in the new vehicle, how long the capital is likely to be tied up, and whether the position still fits the LP’s broader portfolio objectives.

How should LPs assess valuation in a continuation fund transaction?

Pricing is central to the decision. LPs should ask how the value was established, what process was used to support that price, and what assumptions underpin the return case from here. The question is not only whether the asset remains attractive, but whether the pricing, hold period, and value-creation plan leave enough room for future performance.

What should LPs look for on fees, governance, and concentration risk?

LPs should assess whether the economics are appropriate for a seasoned asset and whether the vehicle offers the reporting and transparency needed for ongoing oversight. For single-asset structures in particular, LPs should also consider how the position affects concentration by company, sector, region, and manager, and whether that exposure remains appropriate when viewed through a broader portfolio-construction and stress-testing lens.

Disclaimer

_{The opinions and facts included within this report do not constitute investment advice. Professional advice should be sought before making any investment or other decisions. Preqin accepts no liability for any decisions taken in relation to this report.}

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