Thirty funds. Eight sectors. Twenty industry groups. Three geographies.
Your portfolio spreadsheet looks beautifully balanced - until you realize 40% of your NAV is tied to companies with the same suppliers, or that half your “diversified” GPs own stakes in the same three SaaS platforms.
Welcome to the diversification illusion: when fund-level variety masks portfolio-level concentration, and the risks you can’t see are the ones that hurt most.
Diversification is investing’s first principle, but in private markets, opacity makes it hard to achieve. When you commit to Funds A and B, you see two managers, two strategies, and two vintages. What you don’t know until it’s too late is that both funds:
LPs assume regional variety equals safety. It doesn't. Hidden overlaps in portfolio companies, vintages, and operational dependencies create concentration everywhere, including Canada, the U.S., Europe, and beyond.
Traditional diversification metrics, such as sector, geography, and strategy, miss the links that actually drive portfolio behavior. The real risks hide in the overlap.
Vintage year clustering is the silent killer. Jefferies' 2025 Secondary Market Review found that 63% of LP portfolio volume in 2024 concentrated in funds from 2018 or younger. LPs who deployed heavily during the 2020–2022 zero-rate era now hold portfolios where multiple funds face simultaneous refinancing pressure in a 5% rate environment.
Strategy model overlap. Growth equity and buyout funds shouldn’t move in lockstep - except when they rely on the same valuation methodologies and exit windows. Scenario testing often reveals that strategies assumed to be uncorrelated actually share hidden sensitivities.
Supply chain and customer dependence. When tariffs hit manufacturing in 2025, portfolios spanning consumer goods, industrials, and services all suffered - each depended on the same Southeast Asian suppliers or sold into the same OEM networks. One disruption, system-wide drawdown.
Talent pressure. As late-stage companies’ median runway fell from 24 to 16 months (2022–2024), competition for CFOs and CTOs spiked. Funds across “diverse” strategies felt the same margin pressure. Even human capital can create portfolio correlation.
True diversification means understanding economic exposure, not just counting funds. Sophisticated LPs use three complementary tools:
This is exactly what Tetrix automates - exposing cross-fund overlap and quantifying concentration so you know where your real risks sit.
LP-led secondary transactions surged to $87B in 2024, the highest since 2016, according to Jefferies’ 2025 Secondary Market Review. Roughly 40% of LPs sold positions not opportunistically, but to reduce exposure discovered too late. Tail-end portfolios (10+ years old) traded at ~72% of NAV, a 28% haircut - the cost of unseen concentration.
As McKinsey’s 2025 LP Survey noted, allocators eager to redeploy into uncorrelated strategies often couldn’t; they were stuck waiting for exits that never came. Concentration doesn’t just amplify losses; it blocks reallocation when opportunity knocks.
The goal isn’t to eliminate concentration - it’s to own it deliberately.
Fund reports tell you what you own.
Tetrix shows what you’re exposed to.
Our platform connects the dots hidden behind fund structures, revealing how your portfolio actually behaves under stress - so you can decide whether your concentrations are strategic bets you chose or accidental risks you inherited.
Tetrix can’t promise returns, but it can give you the insight to manage risk proactively rather than reactively.
If that shock comes tomorrow, will your portfolio behave like twenty independent positions or one?