Investment period

The investment period is the phase of a fund's life cycle during which its management team deploys capital by making new investments. It starts at the fund's first closing and generally runs for four to five years, at the end of which the fund in principle makes no new acquisitions and turns to managing and divesting its portfolio.

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During this phase, the General Partner (GP) progressively calls the commitments of the Limited Partnership (LP) investors as deals are done, under the Commitment and drawdown (private equity) mechanism. The quality and pace of deployment condition the effective Vintage year (private equity) of investments and, in turn, the final performance measured by the IRR – Internal Rate of Return, sensitive to the timing of flows.

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By way of illustration, a fund raised in 2026 with a five-year investment period makes most of its acquisitions through 2031, then turns to managing and divesting its portfolio. Management fees, calculated on commitments during this phase, then switch to invested capital.

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Management fees are often calculated on commitments during the investment period, then on invested capital once it closes, which aligns the team's remuneration with its actual activity. The duration and extension conditions of this period are among the structuring clauses of the fund's regulation.