Critics say continuation funds risk Ponzi dynamics

Investment Officer

Continuation funds, once a post-crisis workaround for expiring vehicles in weak exit markets, are booming and find themselves at the centre of growing criticism. Critics warn they distort valuations, mask losses, and edge dangerously close to Ponzi-like dynamics.

Critics, such as Rachel Wasserman, CAMP fellow and a Canadian corporate lawyer at Wasserman Business Law, warn that continuation vehicles are “getting uncomfortably close” to Ponzi territory. “The returns are built on recycled capital, not real performance,” she told Investment Officer.