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Institutional investors are increasingly drawn to private markets, and a key driver is sustainability
Net zero – the way forward in private markets
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It is fair to say 2024 was the year of equities, and US equities in particular.
By comparison, many other financial assets, including private markets, delivered lacklustre performance, leaving investors looking towards 2025 and what it might bring. The commercial real estate market appears to have found a bottom in recent months following a painful period of repricing, but the hoped-for recovery proved elusive in 2024 as the market drifted sideways. Could 2025 be the year that investors with a long-term mindset begin to snap up assets at attractive prices? There appears to be no shortage of capital to spare. Elsewhere within private markets, infrastructure debt held up well, with illiquidity premia and all-in yields, combined with the asset class’s traditional defensive characteristics, appealing to investors.
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Daniel McHugh Chief Investment Officer, Aviva Investors
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This year promises to be a bumpy ride, as markets try to gauge the likely direction of US policy and the response of other nations. The US president’s policies could spark higher inflation. This could underpin demand for private market assets, many of which can help protect investors against inflation’s effects. Against this backdrop, we took the pulse of key investment decision makers at 500 institutional investors in Asia, Europe and North America, representing a combined $4.3 trillion of assets. As well as getting their insights on asset allocation, risks and opportunities, and preferred routes to market, the study also features a deep dive into investor attitudes towards sustainable real assets.
Attitudes towards private markets are changing among investors resulting in a changing role these assets will play in portfolios
Investors are more optimistic about private markets in the long term
Important Information THIS IS A MARKETING COMMUNICATION
Demand for private markets has continued to surge among institutional investors, with this theme now maturing as new preferences emerge
Asset allocation: Strongest sector, investor preferences and belief in private markets
Institutional investors may be increasingly engaging with private markets, but barriers remain that may delay further allocations
The biggest barriers to investing in private markets
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Higher inflation could underpin demand for private market assets, many of which act as a hedge against inflation’s effect
With institutional investors increasingly gravitating towards private markets, a new survey offers insights into their motivations
How the illiquidity premium is attracting investors to private markets
Performance expectations drive institutional engagement with private markets and this is increasing in importance as a factor for their inclusion in portfolios
Performance is a key factor for asset manager selection
Greater institutional investment interest in private markets is now dovetailing with another developing investment theme – sustainability. When asked about how seriously they rank sustainability criteria in their decisions, an Aviva survey of 500 institutional investors found 60 per cent considered this a critical factor in real asset investment assessments. This was an increase from the 49 per cent who felt the same way in 2023. This highlights a growing recognition for incorporating sustainability into private market investments, though there are nuances within this and especially on a geographical basis.
Institutional investors are increasingly drawn to private markets, and a key driver is sustainability.
Which of the following best describes your organisation’s approach to sustainability within real assets?
There are of course many ways to incorporate sustainability into a portfolio, such as when broken down using environmental, social and governance (ESG) criteria, and investors can use a variety of methods in terms of screening and security selection. The prime concern for majority of respondents – 74 per cent – was to prioritise financial returns with broad ESG integration, which demonstrates investors are not losing sight of the need to generate returns for clients. This matches a wider, global trend in impact investing, with 56 per cent of investors globally seeking private market assets that achieve measurable ESG outcomes, up from 48 per cent in 2023. This trend reflects the growing appeal of investments that combine financial performance with positive societal and environmental impact, with increasing understanding of how these can fit into portfolios. Preferences for sustainable real assets differ widely across organisations, often reflecting their resources, capacities and ability to implement these investments effectively. Larger companies tend to adopt more ambitious strategies, driven by their higher profiles and increased regulatory and stakeholder scrutiny. What was also telling were responses from North America.
Sustainability’s place in private market allocations
Net zero commitments have made some progress within private markets, and it was found that nearly half (45 per cent) of institutions had established a policy towards achieving net zero emissions. This was up from 36 per cent in 2023. This trend was being led by the largest firms, those with over $20bn in assets under management, with 60 per cent of these having made commitments, actively set goals or reported on progress. Again, a regional disparity was unveiled. Although the percentages of Europe and Asia-Pacific investors with a strong commitment to net zero – 50 per cent and 46 per cent respectively – broadly tallied with the overall percentage, this was less for North American investors. Here, only 29 per cent of investors had a strong commitment towards net zero, with 34 per cent – the most among all regions – having no commitment whatsoever. This was not totally down to US respondents. At 40 per cent, more Canadian investors than those in the US responded as having no net zero commitment in place.
The net zero issue
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If you were to consider a sustainable fund or strategy, which of the following would be the most appealing when investing in sustainable real assets?
Overall, 60 per cent of all considered sustainability within real asset investment decisions and when broken down regionally, responses from Europe and Asia-Pacific investors broadly tallied with this – with 61 per cent and 64 per cent, respectively. However, only 48 per cent of North American investors felt this way. The difference is even more distinct among respondents who classified sustainability as a ‘critical’ factor. Overall, 15 per cent of all investors responded as such with responses from Europe and Asia-Pacific investors measuring at 18 pre cent and 16 per cent, respectively. Tellingly, only 6 per cent of North American investors felt this way. This reflects the fact that sustainability has become increasingly politicised in parts of the world, which is also apparent in the risks being most heavily identified in different regions. Greenwashing and regulatory uncertainty emerged as greater challenges in the US (67 per cent and 56 per cent respectively) than in Canada (44 per cent and 49 per cent). The biggest challenge for 56 per cent of Canadians was difficulty in measuring the impact. In Europe and Asia-Pacific, by contrast, the difficulty of finding suitable opportunities is the dominant concern, signalling that investors in these regions are more actively pursuing sustainable assets but encountering barriers in execution.
Regional attitudes towards sustainability
Top three (per cent)
Prioritises financial returns with broad ESG integration
Note: Data may not sum to 100 per cent due to rounding.
Critical and deciding factor
One of several factors we consider
Growing, but not essential consideration
Not considered
These developments suggest that, while momentum toward net zero continues, capacity and regional differences play a significant role in shaping the pace and scope of progress. Larger institutions are better positioned to lead, while smaller organisations face resource constraints. Tellingly, progress – or lack thereof, depending on perspective – was broadly the same across asset classes. When asked about decarbonisation plans, around half of respondents were still developing these for real estate, infrastructure and private corporate debt – with the percentages of actual implementation being only 29 per cent, 27 per cent and 15 per cent, respectively.
Positive, measurable impact on a specific ESG objective
Focus on net zero / decarbonisation
2024
2023
Global
Europe
North America
Asia-Pacific
74
73
56
48
50
53
57
71
72
46
52
61
58
83
54
40
70
60
21
4
15
49
29
5
17
47
33
16
6
13
27
2
18
19
1
64
Per cent
Sustainability has become increasingly politicised in parts of the world, which is also apparent in the risks being most heavily identified in different regions
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Private markets may be increasingly entering today’s discussions concerning allocations, but evidence is suggesting investors’ interest in these assets is not restricted to the near term. When asked about their conviction in private markets’ ability to outperform public markets, an Aviva survey of 500 institutional investors found there was a greater expectation of the former’s performance over the long term. Under half of respondents (46 per cent) expected private assets to outperform public assets over one year, but 73 per cent believe the opposite to be true over five years. This is telling of just how much attitudes towards private markets are changing among investors, and the role these assets will play in portfolios as a result.
While near-term expectations are more muted, a significant majority believe private assets will deliver stronger returns over a five-year horizon, signaling a shift in portfolio strategy.
Overall, do you expect private market returns to outperform or underperform public market equivalents over the following time horizons?
However, this attitude of favouring private markets’ outperformance odds over the long term was not universal among institutional investors. Specifically, those investing on behalf of corporate DB and DC schemes were more positive than other investors over one year, with just over half expecting outperformance. In contrast, over five years, DB schemes were the least positive on outperformance with 69 per cent against 80 per cent for financial institutions – the most positive investors. There was also a trend to be identified in the size of respondent that is bullish on private markets. In terms of assets under management, smaller investors (less than $5bn in assets) were less positive than others over five years. More of them expect a similar performance in public and private markets, and therefore fewer expect outperformance.
Who is backing private markets
When arriving at these near- and long-term conclusions about risk-adjusted private market performance, the reliability of income and the illiquidity premium were flagged as highly attractive for some investors. These were regarded as attractive given the risks most commonly identified by investors across all regions. Overall, three key risks were identified by investors – global recession, liquidity risks and political risks – with a slowdown in global growth the most widely selected by 51 per cent of all respondents. This was the case across all regions, even among US investors, which is surprising given the strength of the US economy. From a global perspective, liquidity risks were cited as the next biggest issue when investing in private markets, with nearly half of all those surveyed citing it as a concern. Political risk was the next biggest, with 43 per cent of those surveyed citing it as a worrying factor. However, given how public markets’ outperformance qualities are being favoured over the long term, it is relevant to highlight how investors’ view of risks change over different timeframes as well. With global tensions worsening, geopolitical shifts were highlighted as the most concerning theme over the next decade – with 73 per cent of all investors identifying this as such. Coincidentally, this is the same percentage who expect private markets to outperform over the long term.
The risks on investors’ radars
Which of these structural themes do you expect to create the most significant risks for investors in real assets over the next decade?
Not all private market assets are created equal, and the research unveiled a greater expectation for equity-based assets over the long term, at the sake of debt-based investments. Despite elevated all-in yields due to the current interest rate environment, debt did not feature in the top three private market asset classes where investors expect the strongest risk-adjusted returns over three to five years: real estate equity, private equity and infrastructure equity. Over five years, the largest institutions (with over $20bn in assets) were particularly bullish on private equity (62 per cent) and infrastructure equity (59 per cent), while DC schemes (66 per cent) and public pensions (65 per cent) expect real estate equity to deliver the highest risk-adjusted returns. However, on a regional basis, China’s high profile real estate market problems were notable in the results with Chinese participants less enthusiastic about real estate equity than global counterparts (35 per cent and 60 per cent respectively anticipating high riskadjusted returns over five years). Similar weaknesses were seen in responses from Hong Kong and Japanese respondents as well. At the same time, 48 per cent of all investors expect private debt asset classes to post weaker risk-adjusted returns. Generally speaking, market tailwinds currently support the performance outlook for equity investments, even though higher interest rates mean the risk-adjusted returns on private market debt make these asset classes compelling.
Equity over debt
Geopolitical shifts
Demographic shifts
Technological advances
Outperform
Similar performance
Underperform
69
78
77
27%
Three years
Five years
46%
One year
12%
23%
65%
15%
73%
68
55
Corporate DB and DC schemes are more positive than other investors over one year, with just over half expecting outperformance
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In a recent Aviva survey of 500 institutional investors, high transaction costs and rich valuations were jointly identified as the top barriers to investing in – or increasing allocations to – real assets. In both cases, these were picked by 46% of all investors. Digging deeper, on a regional basis, these challenges affected North American investors more specifically – with 50% of respondents in both cases picking these as key issues. For high transaction costs, that share was also higher than in 2023. Meanwhile, views on asset valuations being a barrier are slightly up from 2023 in Europe and Asia Pacific. These issues stem from the fact that private markets can be harder to access than their listed counterparts. As a result, investors often have to pay extra to invest. The opaque nature of private markets also raised other barriers. While investors reported having less trouble finding suitable opportunities than in 2023, it remained the third biggest barrier to greater investment, with 45% of DC pension schemes citing this as a factor. Forty-five per cent of Asia-Pacific investors also reported they were struggling to find the best private market opportunities. This was higher than the global average of 38%.
Institutional investors may be increasingly engaging with private markets, but barriers remain that may delay further allocations.
What would you identify as the biggest barriers to your institution either investing in, or increasing its allocation to real assets
Institutional investors’ cost concerns were also pronounced in relation to real estate investments. For instance, 45% of investors cited capital expenditure as a key consideration when making real estate investment decisions, against 42%, 37% and 30% for physical climate risks, climate transition risks and operational carbon footprint respectively. This attitude was also present in how investors felt about aligning real estate portfolios with net-zero goals. Globally, three barriers consistently emerge as the most significant: the potential negative impact on short-term returns, valuation shortcomings and regulatory gaps. Among these, the fear of short-term financial trade-offs was the most pressing, as many investors (63% overall) remained wary of the immediate costs of transitioning to sustainable practices. Valuation shortcomings also present a challenge, as current frameworks often fail to capture the forward-looking benefits of sustainable real estate.
Further cost considerations
The unlisted nature of private markets also makes it difficult to rank and record progress, with 33% of all investors identifying a difficulty to benchmark as a barrier to their investment. Against this backdrop, it’s perhaps not surprising that some investors preferred to focus on public markets, with 33% of all investors seeing better opportunities there. This proportion was higher among European respondents, with a sizeable minority of 39% seeing better opportunities in public markets.
Note: Multiple answers allowed.
Investors cite capital expenditure as a key consideration when making real estate investment decisions
When it comes to sustainable investment, the barriers to private market allocations are altogether different. When asked to identify the biggest challenges to investing in sustainable real assets, the highest share of investors – 58% – selected greenwashing. This reflects the fact that private market assets – by their very name – do not adhere to the reporting and regulatory requirements of their public counterparts. That can lead to challenges at a due diligence level and when ascertaining if an asset’s sustainability metrics are as accurate as they seem. Other challenges identified were difficulties in measuring impact and in finding suitable opportunities, with 56% and 54%, respectively.
Sustainability challenges
Again, regional discrepancies were clear. For instance, greenwashing and regulatory uncertainty emerged as greater challenges in the US (67% and 56% respectively) than in Canada (44% and 49%). The biggest challenge for over half (56%) of Canadians was difficulty measuring impact. In Europe and Asia-Pacific, by contrast, finding suitable opportunities was the dominant concern, signalling that investors in these regions are more actively pursuing sustainable assets but encountering barriers in execution. These challenges underline an increasing awareness of the trade‑offs involved in sustainable investing. For example, the renewable energy (wind and solar) space is highly competitive; to gain exposure to the sector, investors might consider battery energy storage opportunities and/or non-core European jurisdictions.
Asset valuations
High transaction costs
Difficulty finding suitable opportunities
Better opportunities in public markets
Difficulty benchmarking performance
44
42
38
34
45
39
30
25
28
(per cent)
What do you see as the biggest challenges to investing in sustainable real assets?
Greenwashing
Dificulty measuring impact
Finding suitable opportunities
Third biggest challenge
Uncertainty over future of government policy/regulation*
* Not asked for in 2023
(Third biggest challenge)
Allocation to private markets is developing from a fringe share to something more meaningful. A recent Aviva survey of 500 institutional investors found over half (56%) allocated more than 10% of their portfolios to these markets. This was a notable increase from the 48% recorded in 2023. The most active institutional investment market in these assets remains North America – Canadian investors allocated an average of 14% to private markets, just ahead of their US counterparts at 11%. In fact, almost a quarter (24%) of Canadian investors allocate over 20% to private assets, in comparison to 11% of US investors. In terms of the kinds of organisations allocating to these markets, central banks and sovereign wealth funds have the largest allocations - averaging at just over 15% of portfolios - but were followed closely by DC pension plans and public pension plans with averages of 12.4% and 12.3%, respectively. The size of DC allocations varies across geographies, but this shows schemes can successfully allocate to private markets. There are also growing signs of significant demand from UK DC schemes for private market solutions to form a long-term part of default funds, although operational and cost challenges persist.
Demand for private markets has continued to surge among institutional investors, with this theme now maturing as new preferences emerge.
How is your institution’s private markets portfolio allocated today?
Regional disparities were also seen among institutional investor appetite for debt-based asset classes. Overall, private corporate debt recorded an average allocation of 10% but this was lower in Asia‑Pacific (9%) and higher in North America (12%). This was likely a result of the maturity of the markets more broadly, the overall size of the private credit market being much smaller in Asia‑Pacific than in the US. And at 5% and 3% of allocations respectively, structured finance and nature-based solutions remained niche investments globally – although 8% of official institutions’ allocations are in structured finance.
There are growing signs of significant demand from UK DC schemes for private market solutions to form a long-term part of default funds
Larger allocations suggest positive momentum for institutional investors’ continued engagement with these assets, though there are signs of this faltering. The most recent survey shows an intention to keep allocating to these assets, but at a lower rate – with 51% of investors in 2024 planning to increase, down from more than 60% in the two most recent surveys.
Private market intentions
This result can be interpreted in various ways – either it suggest allocations to private markets are starting to level off as investors reach their target levels, or it could be a temporary slowdown as institutions adapt to changing market conditions. For instance, the largest organisations with $20bn or more in AUM were least likely to decrease their allocations (6%) and more likely to keep them unchanged (43%). Corporate DB pension and public/government pension funds also have a higher appetite than average, with 54% and 60%, respectively, likely to increase their allocations. In contrast, only 46% of DC pension funds expected to do so. While there may be questions around the momentum of investors’ allocations, the way they plan to allocate is much clearer. Investing directly in private assets remains the most popular way, with over half (52%) selecting this option – the same percentage as in 2023. Even though this was lower in Europe – with 48% - it was still the most popular option chosen. That said, multi-asset and single-asset-class pooled funds have increased in popularity in the last year – with respective scores of 46% and 40%. Conversely, appetite for pooled funds with specific ESG goals has cooled. In 2023, 30% of all investors chose this as an option but it contracted to 25% in 2024 - scoring less than co-investing and club deals, which together were chosen by 35% of investors.
Per cent of average
Do you expect to increase or decrease your allocation to private markets over the next 24 months and, if so, by how much?
Per cent of allocation
12
2022
Last year was the first time that private equity was added into the allocation split in the survey, making a year-on-year comparison impossible, but the overall dominance of equity-based assets in private market allocations remained clear. Real estate equity, private equity and infrastructure equity were the three biggest private market allocations, with 23%, 19% and 13% recorded, respectively. In North America, Canadian portfolios were more heavily tilted to real-estate equity (30%) and infrastructure equity (16%), while US portfolios favoured private equity (20%, against 11% in Canada).
The preferences shaping portfolios
Real estate equity
Private equity
19%
Infrastructure equity
13%
Real estate long income
9%
Real estate debt
Private corporate debt
10%
Infrastructure debt
8%
Structured finance
5%
Nature- based solutions
3%
Other
24
23
9
51
11
32
10
43
Increase
No change
Decrease
A recent Aviva survey of 500 institutional investors found 73% expected private market assets to outperform over the next five years. That said, while performance was the main criterion, institutional investors were becoming increasingly unhappy with it. Globally, the institutional investors who were satisfied with private market performance fell from 75% in 2023 to 61% in 2024. This reflects the fact private market returns were relatively lacklustre in 2024, especially in comparison with public markets, as listed equities soared to record highs. Whereas 68% of DC schemes were satisfied with investment performance, just 35% of official institutions felt the same. Investor satisfaction has fallen in other areas too, most notably in relation to the quality of enhanced or tailored reporting, which declined to 56% from 82% in 2023. Competitive fees were also highly sought after with 68% of investors citing this as important, followed by a manager’s proven thematic or sectoral expertise for 65% of investors. There were no significant regional differences. Almost two-thirds of official institutions also listed the quality of ESG/sustainability integration as an important factor, as did 57% of DB schemes, against around half of other investor types. The larger the institution, the more ESG was considered important as well.
Performance expectations drive institutional engagement with private markets and this is increasing in importance as a factor for their inclusion in portfolios.
Three assets expected to deliver the strongest risk-adjusted returns over three and five years: real-estate equity, private equity and infrastructure equity
What are your main reasons for allocating to real assets today? And what do you expect to be the most important reasons in the next two years?
Note: Multiple answers allowed. * Asked for Non-DC permissions.
Performance clearly being the top criterion for institutional investors, this gives an indication of which assets they are likely to prioritise. The survey’s findings revealed a consensus on the three assets expected to deliver the strongest risk-adjusted returns over three and five years, with these all equity-based: real estate equity, private equity and infrastructure equity. Despite elevated all-in yields as a consequence of the interest rate environment, debt did not feature in the top three. Over five years, the largest institutions (with over $20 billion in AUM) were particularly bullish on private equity (62%) and infrastructure equity (59%), while DC schemes (66%) and public pensions (65%) expected real-estate equity to deliver the highest risk-adjusted returns. In contrast, and despite elevated all-in yields, respondents were less bullish on the prospects of debt-based asset classes over these time frames. This was particularly true in Canada, where 60% of investors expected weak risk-adjusted returns from real-estate debt over five years, against 48% globally and 53% in the US.
Following through with allocations
Interestingly, despite a rise in protectionist policies and growing trade tensions around the world, institutional investors were increasingly looking further afield for private market opportunities. Over half of all investors expected to increase allocations outside their home market over the next two years, potentially in the pursuit of greater diversification benefits. This was highest among institutions with less than $5bn in AUM (60%), DC pension funds and official institutions (61% and 65% respectively). Regionally, investors in Asia-Pacific were most likely to increase their allocations outside their home market (64%), particularly in Japan, Singapore and South Korea. But despite investors looking further afield, home regions still demanded the lion’s share of their attention for future allocations, and this was the same for each region surveyed. When investing further afield, European investors preferred North America to Asia-Pacific. In North America, US investors strongly preferred allocating to Asia-Pacific (62%) than to Europe (29%), but the opposite was true for Canadians, who preferred Europe (52%, versus 33% for Asia-Pacific).
Diversification
Long-term income
Inflation-linked income
Illiquidity premium
Capital growth
Cashflow matching*
41
37
36
14
Now
Next two years
Recognition of the illiquidity premium often attached to these assets is also gaining traction and now rising in importance. The survey found that 40% of investors saw this as the main reason for private market allocation, up from a quarter the year before. At the same time, 47% of investors expected this to eventually become the key reason over the next two years, overtaking long-term and inflation-linked income as a motivation. This represents a growing sophistication of private market investors, and with it a better understanding of what these assets can bring to a portfolio. The illiquidity premium is particularly highly valued by North American institutions: 48% cited it as one of the main reasons to allocate to private markets today, making it the second most important consideration, with 54% seeing this as the case in two years’ time (including 58% in Canada). It could be argued this is a potential sign that, as private market investment matures, investors are becoming more interested in analysing a growing array of data points.
The illiquidity premium
In a recent Aviva Investors survey of 500 institutional investors, diversification remained private markets’ key appeal for 70% of investors. However, recognition of the illiquidity premium often attached to these assets is also gaining traction and now rising in importance. The survey found 40% of investors see this premium as the main reason for allocating to private markets, up from a quarter the year before. And 47% of investors expect the illiquidity premium to eventually become the key reason for private market allocations over the next two years, overtaking long-term and inflation-linked income as a motivation. This reflects a growing understanding of what private market assets can bring to a portfolio. The illiquidity premium is particularly highly valued by institutions in North America, where 48% cited it as one of the main reasons to allocate to private markets today (making it the second most important consideration) and 54% expected it to be a key driver of investment in two years’ time (the figure in Canada was higher, at 58%). This may reflect a growing sophistication among the investor base, as it starts to integrate and analyse a wide array of private-market data points. Investors’ attraction to private market assets’ illiquidity premium aligns with a growing expectation for better returns over the long term. Over one year, 46% of respondents believed private markets would outperform public markets, with 27% expecting a similar performance between public and private markets. Over three years, 65% expect private vs public outperformance. When asked what they expect over a five-year period, nearly three quarters (73%) of investors expected private markets to outperform public markets. Only 12% of investors anticipated the opposite over a five-year timeframe.
With institutional investors increasingly gravitating towards private markets, a new survey offers insights into their motivations.
The maturing of investors’ knowledge in private markets is not only evident in attitudes towards illiquidity premiums, but also in the rate of investment itself
Illiquidity premia may be attracting more investors to these assets, but the challenges illiquidity raises – specifically around the selling of investments in volatile times – is still a significant risk. Overall, liquidity risks were highlighted as the second most prominent risk for investors, with 46% of respondents feeling this way. This placed liquidity risks closely behind fears of a global recession, which was identified as the top concern for 51% of all respondents. The results varied based by segment, but liquidity was deemed the most significant risk by corporate DC investors: over half (53%) of corporate DC respondents picked liquidity risk as their top concern for investing in private markets, ahead of 48% for global recession fears. Illiquidity can be a particular challenge when attempting to sell assets on the open market, which is why the pooling of investments can be so attractive. More investors responded that they would prefer to access these investments through a pooled structure, where a dedicated third party can take on the logistical challenges buying and selling illiquid assets can pose. Globally, 46% of investors would prefer a multi-asset pooled fund for this allocation compared to 41% the year before. Investor preference for single-asset-class pooled funds also grew – to 40%, compared to 37% in 2023.
Liquidity’s double-edged sword
The maturing of investors’ knowledge in private markets is not only evident in attitudes towards illiquidity premia, but also in the rate of investment itself. Though the shift into private markets is continuing, data shows that the rate is slowing, which suggests target levels of exposure are being reached. For instance, planned increases to allocations were above 60% for all regions in both 2022 and 2023, compared with a lower figure of 51% for 2024. This may reflect a temporary slowdown in the shift to private markets as institutions adapt to changing market conditions, with geopolitical uncertainty and global recession fears still a main concern for many firms. The largest organisations with $20bn or more in AUM are least likely to decrease their allocations (6%) and more likely to keep them unchanged (43%). Allocations may continue to slow, but it remains to be seen by how much, given the growing expectations for private market outperformance and recognition of the benefits illiquidity premia can offer portfolios.
What’s next?
