Private market demand holds firm for HNW investors seeking higher returns
One in four sophisticated investors is directing at least 25 per cent of their overall portfolio towards private assets, according to a survey by Connection Capital.
From its annual survey of high-net-worth (HNW) and ultra-high-net-worth (UHNW) investors, the alternative investment platform found that 40 per cent of respondents targeted over 20 per cent of their portfolio in private assets, while two-thirds aimed for 10 per cent or more.
Read more: HNWIs more bullish on private markets than public
Connection Capital said this level of appetite was in line with previous years’ surveys, despite a backdrop of fewer exits across private markets.
More than half of investors (54 per cent) said they expected to maintain their current allocation levels to private assets over the next 12 months, while almost a quarter said they plan to increase.
The potential for outperformance was the main reason for continued strong demand, cited by 78 per cent of survey respondents.
Europe was currently presenting the most compelling investment opportunities, according to 31 per cent of investors.
A quarter said the UK looked the most attractive region, while the US – with continued economic and political unpredictability weighing on demand – saw 20 per cent of investors favouring its opportunity set.
The desire for outperformance holds more weight than concerns over liquidity, with 85 per cent agreeing they are “happy to accept the illiquidity associated with private market investments if returns are superior to more liquid investments”.
Just 15 per cent said they “would value more liquidity in exchange for lower target returns”.
Read more: Allianz and AlTi join forces on UHNW private debt program
“Even in the face of political change and global volatility, private equity continues to shine for our investor base. With the right access and due diligence, clients see the potential to outperform, and are prepared to commit significant capital accordingly,” said Claire Madden, founder and managing partner at Connection Capital.
Connection Capital provides private professional investors with access to direct private equity and debt transactions and private market alternative investment funds that are usually only available to institutional investors.
At end of March 2025, it had raised £550m of client funds, invested across a diverse portfolio.
Read more: Portfolios with 20pc private markets allocation ‘drastically outperform’
