Asset owners expect their allocation to private markets to increase from 19 per cent of assets under management (AUM) today to 23 per cent within the next five years, according to Morningstar’s asset owner perspectives survey.

The study surveyed over 500 asset owners across 11 countries in North America, Europe and Asia-Pacific, with combined AUM of over $20tn (£14.9tn).

Investors in Europe appear to be the most prone to private markets, with respondents indicating they expect 25 per cent of AUM to be dedicated to private markets strategies. This compares with 21 per cent in North America and 23 per cent in Asia-Pacific.

However, Asia-Pacific respondents are the most likely to report increasing allocations to private equity (47 per cent) and direct lending (38 per cent), while North American asset owners lead in infrastructure (41 per cent) and private debt (32 per cent).

Last year, asset owners directed new capital in private markets primarily toward private equity (43 per cent), infrastructure (35 per cent) and private credit (32 per cent), while maintaining relatively stable allocations elsewhere. Only the real estate sector stood out with respondents more likely to decrease than increase exposure, suggesting continued caution toward the asset class despite broader interest in private markets

Among the top three reasons for pursuing private markets, asset owners cite diversification versus public markets (56 per cent), higher expected returns (42 per cent), and access to specific market themes like AI electrification and data transmission (29 per cent).

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On the other hand, liquidity risks (63 per cent), transparency issues (43 per cent), and limited availability of data (28 per cent) remain hurdles for private market investments.

The survey also found that asset owners who increased exposure to at least one private asset class in the past 12 months, were more likely to be concerned about all AI-related risks than those who did not.