Retail investors will drive 50pc of private market flows by 2027
Institutional investors are anticipating a significant uptick in retail allocations to private markets over the next two years, with retail investors set to become the main source of private fundraising over the period, according to new research by State Street.
A survey of 500 institutional investors, including asset managers, private markets managers and asset owners worldwide, found the majority of respondents (56 per cent) now believe at least half of private market flows will come through semi-liquid, retail-style vehicles marketed to individuals within one-to-two years.
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More than two in five (22 per cent) respondents said they believe retail-style vehicles will be the main fundraising mechanism for private markets over the period, up considerably from 14 per cent last year.
“The democratisation of private markets is a trend that has been underway for a number of years; however, 2025 has the potential to be a watershed year for retail allocations to private markets,” said Donna Milrod, chief product officer and head of digital asset solutions at State Street.
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“Distribution to wealth channels and retail fund flows could become the dominant contributor to future fundraising.”
It comes as pension schemes worldwide are set to allocate more to private markets over the next few years.
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A number of UK pension schemes have pledged to invest at least 10 per cent into private markets by 2030. US pension provider Empower recently announced an option to invest in private markets in its retirement plans.
