Dry Powder in AIFs: Why Cash Reserves and Follow-On Capital Matter

In private market AIFs, one of the most under-discussed ideas is dry powder. Dry powder is the capital reserved for follow-on investments, support rounds, or opportunistic buying when the cycle turns.

Without reserves, a fund can be forced to say no at the wrong time, or dilute its best winners by not supporting them later. With reserves, the manager can protect positions, average down intelligently, or fund growth when valuations are attractive.

As an investor, ask how reserves are planned and governed. Dry powder is not laziness. In many strategies, it is preparedness.

Truvest Insight: Reserves are strategic, not idle.

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