Private wealth markets could reach $13tn by 2032
The size of the global private wealth market for private markets strategies could be worth between $10tn (£7.71tn) and $13tn by 2032, according to new research from Novantigo.
The newly-established research and consulting firm has published a report titled ‘Private Assets in Private Wealth Portfolios: The Secret to Growth’; in which they noted that private wealth allocations have been increasing.
However, Novantigo also found that most asset managers remain under-allocated to private market capital, suggesting that there is plenty more room for growth in the coming years.
The addition of ELTIFs and evergreen funds in Europe could further encourage private market investments, the report claimed.
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“The growing momentum and competition in this sector emphasize the urgency for those who are planning to tap into this market to swiftly define their engagement strategies” said André Schnurrenberger, co-founder and managing partner at Novantigo.
“The market opportunity is substantial, but distribution channels are constrained, and primarily dominated by a limited number of large global private banks who generally are ‘over-shopped’. This offers a distinct advantage to early movers.”
Almost half (45 per cent) of the asset managers surveyed by Novantigo said that they manage less than 15 per cent of their assets from the private wealth channel. However 78 per cent said that they have set a goal to have at least 15 per cent of private markets assets within the next three to five years.
Only 53 per cent of asset managers currently have dedicated private wealth teams, but 44 per cent of global traditional asset managers and 50 per cent of global private markets asset managers plan to expand their private wealth sales teams in Europe over the next year.
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Novantigo added that fundraising is becoming more challenging as more players and evergreen funds enter the European market, although the research firm noted that fewer boutique private markets managers plan to expand in Europe, preferring instead to focus on their domestic markets and institutional investors.
“While some private banks and wealth managers have a long history of offering evergreen funds, others are still in the early stages of determining their approach,” said Justina Deveikyte, co-founder and managing partner at Novantigo.
“As the features of evergreen funds continue to evolve, some banks prefer not to rush and instead opt for a more conservative approach by initially selecting only one or two funds.”
The European market has seen a surge of evergreen funds dedicated to the private wealth channel in recent years, and Novantigo expects this trend to continue, with 23 per cent of asset managers planning to launch new evergreen funds in 2024.
40 per cent of those launches will come from the top global private markets firms, while 28 per cent will come from traditional asset managers with private markets capabilities.
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