Examining Private Fund Distribution Rates Under Various Tariff Policy Regimes

Does tariff policy impact when funds make payments to investors? That is the flip side of our previous examination of tariff policy impacts on private fund contribution rates.

At the time, we discussed how the new regime of heightened tariff policy had limited effects on private markets due to the ability to weather short-term price shifts, and how reciprocal reductions in production from tariffs may reduce any region-shifting inclinations from investors.

To answer today’s question on the timing of fund payments, we repeated the previous methodology while looking at distribution rates across the same three geographies (North America, Europe-Western, and Asia-Emerging). We also updated our timeline with the first half of 2025 to capture new trade effects.

Key Takeaways

Starting from the same spot as last time, we key in on Q1 2018 as the initiation of a new tariff strategy in the U.S. and Q4 2021 as the end of the U.S. and EU tariff policies.

Leading into 2018, both Europe and Asia had steady growth in distribution rates, which had slowly climbed from 1% of paid in per quarter to 8% and 5% average distribution rates by Q1 2018. America saw much choppier but rapid growth, likely driven by outlier funds with high multiples. Regardless, both demonstrate the robust and evolving return structure of private funds through the sample period.

During the 2018-2021 period, American distributions appeared somewhat flatter, though that could easily have been just a leveling off of the prior trendline as the U.S. economy was beginning to cool in the late 2010s.

With the volatility of 2020, distributions logically remained lower as funds conserved capital. Distributions surged later in 2021, when more easy money and reduced tariff structures emerged. Similarly, Asia and Europe distributions contracted from 2018-2020 due to tighter trade with the U.S. and contracting markets before both regions rebounded in 2020 and peaked in lockstep with the U.S. at the end of 2021.

From 2022 onward, volatility has been the watchword of distribution rates. American private markets have continued their positive trendline, but with massive swings in distribution rates. European markets, which have operated on a smaller scale with tighter distribution, also experienced volatility in 2023. Curiously, Asian markets did not see the same.

This is likely due to limited sampling bias in the data that created the appearance of outsized volatility effects. However, there may have been some elevation in distribution coming out of 2020 with tightening economic conditions that led to some funding conservation.

Looking Ahead

This year, it is important to consider how the graph ends, with all geographies trending downward in 2025. This is likely due to funding conservation in the wake of economic and policy instability around the world. However, as stated in our previous chart, because private markets have a longer time horizon they are capable of enduring volatility.

That said, should uncertainty remain, we are likely to see dropping interest rates in the U.S. buoy capital access for funds that need to maintain their portfolios and defer capital distributions.

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