Investment Period

When it starts and how long it lasts

Limited partnership agreements (LPAs) define the start date: commonly the initial closing date, or the date of the first investment or the first management fee accrual. Length is a negotiated term. Market practice for buyout funds is commonly around five years, with shorter periods in some credit and secondary funds and longer ones in some venture and infrastructure funds; the fund term is set separately. Some LPAs let the GP extend the investment period once with LPAC consent.

How it can end early

Common early-termination triggers are: a key person event that is not cured (often first producing a suspension); a vote of LPs under a no-fault divorce clause; removal of the GP for cause; and the GP's own election, often when commitments are substantially invested. Many LPAs also bar the manager from launching a successor fund with the same strategy until a stated share of commitments is invested or reserved, or the investment period has ended, which ties fund timing to deployment pace.

What the fund may do after it ends

After the investment period, the GP may usually still call capital to: complete investments approved or contractually committed before the end date (often subject to a deadline); make follow-on investments in existing portfolio companies, frequently capped as a percentage of commitments; pay the management fee and fund expenses; and meet liabilities and indemnities. New platform investments are prohibited. The remaining unfunded commitment is therefore partly contractual rather than expected.

Fee consequences

In many private equity funds the management fee is charged on commitments during the investment period and then steps down, either to a lower rate, to a different base such as invested capital or NAV, or both. The worked example shows how the base change, not only the rate change, reduces fees in later years.

How LPs use it

LPs read the investment period together with deployment data: a fund that is largely invested two years in will need a successor fund early, compressing the time between re-ups and concentrating vintage exposure. A long investment period with slow deployment can mean fees on idle commitments. LPs also check the post-period follow-on cap, because it determines how much support the portfolio can receive later.

Worked example

Examples are illustrative; figures are not market data.

Not the same as

• Fund Term (Fund Life): The fund term is the whole life of the fund until dissolution; the investment period is its first phase.
• Harvest Period: The harvest period is the informal name for the years after the investment period, when the focus is on exits.
• Investment Period Suspension: A suspension is a temporary halt of the investment period after a trigger; the investment period is the window itself.

Common mistakes

• Assuming no capital can be called after the investment period ends.
• Treating the investment period end date as fixed when key person, no-fault or successor-fund provisions can end it early.
• Comparing fees across funds without checking whether the fee base changes after the period.

Edge cases

• Deals signed before the end date but closing afterwards are normally permitted if the LPA's committed-transaction language covers them.
• Recycled proceeds may be reinvestable only during the investment period, or within a set window after it.
• In evergreen and open-end funds there is no investment period; capital is invested continuously.

Sources

1. ILPA Principles 3.0: Fostering Transparency, Governance and Alignment of Interests for General and Limited Partners. Institutional Limited Partners Association, ILPA, Third edition, released 27 June 2019. Status: Current edition (no 4.0 found as of 2026-10-01) (checked 2026-10-01). pp. 19, 23, 42 — supports: Key person or cause event results in automatic suspension of the investment period; a simple majority in interest may terminate or suspend the investment period without cause; glossary: the investment period runs from the initial closing to the LPA end date or an early termination
2. ILPA Model Limited Partnership Agreement (Whole of Fund and Deal-by-Deal versions). Institutional Limited Partners Association, ILPA, Whole of Fund first released October 2019, updated July 2020; Deal-by-Deal version and term sheet released 22 July 2020. Status: Current (checked 2026-10-01). WOF Sec. 1.1 ('Commitment Period'); Secs. 7.4, 8.3, 9.1, 11.3-11.5 — supports: Commitment period from the initial closing to the fifth anniversary, extendable once by one year with Advisory Committee or Majority in Interest consent and ending early on full deployment, an LP vote or a key person termination; post-period drawdowns limited to expenses, capped follow-ons and committed deals; management fee step-down; successor-fund restriction

• Deployment Pace
• Management Fee
• Key Person Clause
• No-Fault Divorce
• Unfunded Commitment
• Limited Partnership Agreement (LPA)
• Fund Term (Fund Life)

• Capital Commitment
• Closed-End Fund
• Distributions to Paid-In (DPI)
• First Close
• J-Curve
• Temporal Validity
• Vintage Year