The vast majority (86 per cent) of global asset owners invest in private markets, new research has found, accounting for 13 per cent of their portfolio on average.
Northern Trust’s inaugural study of 180 asset owners globally, including pension funds, family offices and sovereign wealth funds, showed that they are prioritising investment diversity across public and private assets.
Public equities account for 42 per cent of their portfolios on average, followed by fixed income (27 per cent) and private markets.
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Of the respondents that invest in private markets, 67 per cent hold private equity, making it the most popular alternative asset, followed by commercial real estate (55 per cent), private credit and direct lending (49 per cent), and residential real estate (46 per cent).
“The growth of private debt within the broader private markets landscape over the past decade cannot be overstated, with this area of fixed income now a mainstay in many institutional portfolios,” the report said.
“The breadth of funds available, along with managers and originators’ willingness to create portfolios that fit with long-term investors’ objectives, means this asset class has offered significant opportunities.”
Read more: European private debt volumes reached record high of €68.7bn in 2024
Within private debt, 45 per cent allocate to asset-backed products, 39 per cent to real estate debt, and 37 per cent to both preferred equity and senior direct private debt and structured products.
Northern Trust’s research also found that large institutions are attracted to more specialised areas such as infrastructure debt and special situations, compared to smaller investors.
“The new Northern Trust figures illustrate how the spotlight is shifting from public to private capital markets,” said Michael Aldridge, president and chief risk officer of AI private markets firm Accelex. “Private markets have consistently delivered strong, risk-adjusted returns, offering diversification that public markets are struggling to match in recent years. This growing confidence not only shows the strength of private markets but is also a reflection of the huge advancements in transparency that have reshaped investor access to data in the space.”
Read more: Private credit market set for significant growth in 2025
