Investment Period
The investment period is the phase of a fund’s life when the GP is permitted to make new investments and call capital for them.
Allocator relevance: Determines when capital will be deployed, how pacing works, and when portfolio composition becomes fixed.
Expanded Definition
Most closed-end private funds have an investment period (often several years) after which new investments are restricted to follow-ons or specific exceptions. During this period, managers source deals, deploy capital, and build the portfolio. For LPs, the investment period affects the timing of capital calls, fee drag, and exposure ramp-up.
Investment period differs from fundraising period: a fund can be investing while still fundraising after first close.
How It Works in Practice
LPs commit at closes, then receive capital calls as the GP invests. As the investment period ends, deployment transitions to managing and exiting the existing portfolio.
Decision Authority and Governance
Governance is embedded in the LPA: what qualifies as a new investment, what follow-ons are allowed, and what exceptions exist. Oversight ensures the GP does not drift outside mandate late in the period.
Common Misconceptions
- Investment period starts at final close.
- Investment period equals fund life.
- After the investment period, nothing changes.
Key Takeaways
- It defines the active deployment window.
- It drives capital call timing and fee efficiency.
- Distinct from fundraising period and term.