Schroders: Investors to up exposure to private equity and debt

Global investors and advisers are planning to increase allocations to private assets over the next 12 months, with private equity topping the list followed by private debt.

A Schroders survey of almost 3,000 institutional investors and gatekeepers, which collectively have $74.5tn (£57.3tn) in assets under management or advice, found that 80 per cent of respondents are already investing in private markets or plan to do so in the near term.

Despite a muted environment for private equity deals in recent years, the asset class was most popular with respondents among private assets, with 52 per cent saying they plan to increase their allocation over the next year.

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This was followed by private debt (45 per cent), renewable infrastructure equity (42 per cent) and infrastructure debt (42 per cent).

Looking at specific investment themes, access to the technological revolution was cited as best accessed by private markets, followed by energy transition and decarbonisation, and then sustainability and impact.

“Private markets are an essential source of creative and long-term capital to finance fundamental structural shifts in our societies – driven by decarbonisation, deglobalisation, demographics and the AI revolution,” said Georg Wunderlin, chief executive of Schroders Capital.

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“Investors are recognising the potential of private assets to drive positive change, and, therefore, higher returns.

“In addition, private assets are valued as a source of diversification. Following shifts in the rate environment private market investments are at a pivotal moment.

“It is crucial to enable not only institutional but also individual investors to profit from the benefits of private markets investments. Accessibility of private asset classes has improved significantly in recent years on the back of a much greater array of fund structures aimed at individual investors. We see it as a key mission for us to continue to drive this trend.”

Schroders’ survey comes after research from fellow asset manager BlackRock, which found that 91 per cent of global insurers are planning to increase their allocations to private markets over the next two years.