Half of LPs plan to increase private markets exposure

More than half (53 per cent) of institutional investors intend to increase their exposure to private markets, with 35 per cent eyeing private debt specifically.

According to new data from the bfinance 2024 Global Asset Owner Survey, there has been a “strategic shift” in private markets, with 44 per cent of wealth managers either making their first investments in the space, or boosting their exposure to open-ended funds in private markets.

Almost half (47 per cent) of investors said that they expect a reduced illiquidity premium, but this has no effect on their asset allocation intentions.

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Meanwhile, 37 per cent said that they are in the process of boosting exposure to secondaries.

A German family office told bfinance that increased investor demand could suppress the illiquidity premium compared to the last two decades.

“The demand for ‘real assets’ will not go away in an economic environment with more inflation pressure from the supply side,” the investor said.

“Increased demand from investors for private market assets (institutional and in the future also retail), supported by banking disintermediation, and less restrictive regulation (to enable more flows into sustainable investments).”

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Elsewhere in the survey, bfinance found that DB pensions are more likely than other investors to be reducing their exposure to equities, and more likely to be increasing private markets and fixed income.

Meanwhile, bfinance noted that satisfaction rates are dropping sharply across asset classes, with private equity’s rating falling from 94 per cent in 2022 to 69 per cent in 2024.

Private debt’s satisfaction rating fell to 84 per cent this year, down from 94 per cent in 2022.

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