Despite doubts on retail, private market allocations primed for growth
State Street has released its third annual private markets survey, highlighting that despite macroeconomic challenges, institutional investors are poised to increase their stakes in private markets significantly over the coming years.
The survey included insights from 480 institutional investors across North America, Latin America, Europe, and Asia-Pacific, including asset managers, insurance companies, and asset owners.
The study indicates a continuing trend of shifting from public to private assets within portfolio allocations. More than a third of institutions (36 percent) have already allocated over half of their portfolio to private markets, a number expected to rise to 41 percent within the next three to five years. Additionally, 59 percent of institutions have allocated at least 30 percent to private markets, with projections reaching 71 percent by 2028.
“The great rotation from public to private markets is not slowing down, with investors set to allocate more to private assets than ever before,” Donna Milrod, executive vice president and chief product officer at State Street, said in a statement.
“This increasingly sophisticated private market universe means the current economic environment, coupled with investors’ desire for wider, more diverse avenues of capital, is making private markets attractive now and for the foreseeable future.”
The survey found broad skepticism about the accessibility of private markets for retail investors, with 54 percent of respondents feeling that current investment products do not adequately serve this demographic. Nonetheless, nearly half (49 percent) recognized a strong demand among retail and defined contribution investors for private market access, driven by potential
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