A new study has found that 81 per cent of institutional investors intend to increase allocations to private markets over the next five years, with private infrastructure, private credit and private equity identified as top picks.
According to preview results from Nuveen’s sixth annual EQuilibrium Global Institutional Investor Survey, of those, more than half (51 per cent) intend to increase private allocations in their portfolios by five to 15 percentage points.
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In the next two years, 43 per cent of the 800 institutions surveyed plan to grow allocations to private infrastructure and private credit, followed closely by private equity (42 per cent).
Nuveen found that, while diversification has emerged as a benefit of private market allocations in portfolios, 46 per cent of institutions agreed that diversification within their alternative credit allocation is a priority over the next five years.
Within private fixed income, institutions identified private investment grade corporates (44 per cent), private investment grade infrastructure debt (44 per cent) and private asset backed securities (40 per cent) as their top investment choices.
“The scale and pace of institutional capital flowing into private markets continues to be substantial,” said Harriet Steel, global head of institutional distribution at Nuveen.
“Institutional investors are taking full advantage of the powerful combination of benefits offered by private markets: diversification away from public market uncertainty, enhanced income generation, and the potential for improved risk-adjusted returns.”
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She expects this “structural shift to accelerate” aided by new technology and as investors “seek resilience in an environment of lingering volatility”.
Based on its survey results, Nuveen identified three “megatrends” influencing investment strategy, with 63 per cent of investors identifying AI as the biggest megatrend impacting their decisions over the next five years, while energy transition ranks second at 40 per cent, followed by deglobalisation at 36 per cent.
Nuveen surveyed 800 institutions from 30 countries, representing nearly $17tn (£12.4tn) in assets under management.
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