The majority (84 per cent) of institutional investors and wealth advisors intend to increase their private markets investments within the next two years, with private credit among the asset class strategies that rank highest for growth, according to a new survey.

Brown Brothers Harriman’s (BBH) second annual Private Markets Investor survey revealed that more than a quarter of investors will allocate over 30 per cent of their investments to private markets strategies in the next five years. 

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Of the 84 per cent that plan to grow their private markets investments within the next two years, private equity was identified as the top target for new investment, at 54 per cent, up 16 points from last year, followed by private credit (44 per cent), which is up 20 points year-over-year. 

BBH found that while private markets are increasingly important to investors’ overall portfolios, liquidity has also emerged as a top priority.

The 500 institutional investors and wealth advisors in the US, the UK, Germany, Switzerland, and Japan whose views were captured in the survey indicated that their preferred window for capital deployment in private markets is four to six years, followed by an even shorter window of two to three years.

BBH attributed the reduced capital timeframes to the fact that three out of four private market investors suggested the time it took to get capital returned grew longer over the past year.

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“Investors are leaning into private markets, and macro and geopolitical uncertainty is only strengthening that conviction,” said Lata Vyas, head of alternative client solutions at BBH. 

“At the same time, they’re becoming more discerning about liquidity, and they want to understand exactly how it works: how redemptions are governed and what to expect when they need access to their capital.”

The findings also highlight transparency as a key focus for investors, according to BBH, with a “clear call” for more reliable reporting of liquidity calculations and clarity around redemption rules and gating criteria. 

More than three-quarters are turning to general partners or advisors for support and to help their understanding of these features.

Investors noted that improved transparency into underlying holdings and greater liquidity and trading efficiency would speed up their adoption of innovative structures and products.

“The managers who succeed will be the ones who pair structures offering liquidity, like evergreen funds, with clear rules, real transparency, and a genuine commitment to investor education,” added Chris Adams, global head of business development for alternative funds services at BBH.

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