Allocation Fatigue

Allocation Fatigue is the decline in an allocator’s willingness and capacity to approve new commitments due to cognitive load, governance load, and portfolio saturation. Fatigue can be driven by too many opportunities, too many re-ups, policy pressure (pacing limits), internal bandwidth constraints, and the operational burden of managing an expanding manager roster.

Importantly, allocation fatigue is not always about conviction. It’s about capacity. A tired IC becomes more conservative, more reliant on incumbents, and less tolerant of complexity or ambiguity.

How allocators define allocation fatigue risk drivers

Allocators evaluate fatigue through:

• Decision bandwidth: number of live diligence processes vs staffing
• Manager roster complexity: too many relationships to monitor properly
• Calendar congestion: IC cadence and memo throughput limits
• Policy pressure: pacing limits and constrained allocation slots
• Operational load: onboarding, ODD, legal, side letter tracking
• Opportunity overload: too many similar managers competing for attention
• Stress regime: fatigue rises in drawdowns and distribution droughts

Allocator framing:
“Even if this is good, do we have the bandwidth and capacity to add another relationship right now?”

Where allocation fatigue is most visible

• programs with many re-ups and overlapping strategies
• periods of weak distributions and tighter liquidity
• institutions with lean teams managing complex portfolios
• environments with high scrutiny (public allocators, boards)

How fatigue changes outcomes

Low fatigue environment:

• faster decisions and higher openness to new managers
• more willingness to do first-time relationships
• less friction on legal and ODD
• better conversion rates for high-quality opportunities

High fatigue environment:

• longer decision timelines and “slow no” outcomes
• preference for incumbents and simpler terms
• increased drop-off late in diligence
• smaller tickets or delayed commitments to “next vintage”

How allocators evaluate discipline

Conviction increases when managers:

• reduce complexity (clean terms, clear data room, fast answers)
• surface veto gates early and resolve them quickly
• present precise fit to allocator constraints (ticket size, pacing)
• provide evidence that reduces IC work (clear attribution, references)

What slows decision-making

• heavy legal complexity and MFN pressure
• unclear differentiation (looks like five other funds)
• slow response and low-quality materials
• “one-off” exception requests that create extra governance work

Common misconceptions

• “Fatigue is an excuse” → it’s a real capacity constraint.
• “More follow-ups helps” → it often increases fatigue.
• “If they like us, they’ll make time” → they make time for clarity, not complexity.

Key allocator questions during diligence

• How many live decisions does the IC handle per quarter?
• What makes this manager worth adding vs staying with incumbents?
• What is the incremental monitoring and governance load?
• What terms or structures create friction?
• What would reduce workload and accelerate approval?