Private Markets Remain High on the Agenda for Institutional Investors

Private markets remain a key focus for institutional investors, with significant planned increases in allocations to private equity, credit, infrastructure and real estate, according to Nuveen.

The latest global institutional investor survey found that over 90% of investors now hold both private equity and private credit, which is more than double the 45% reported in Nuveen’s first survey in 2021.

This trend looks set to continue as investors are amplifying their commitment to private investments, with 66% planning to increase their allocations over the next five years.

Although investors are looking to boost allocations across private infrastructure, credit, and equity, they expect the largest increases to be in private equity. Nuveen strategists suggest that growing optimism around economic growth is a key driver behind private equity’s momentum.

Other asset classes are also drawing strong interest. Private infrastructure and private real estate saw the biggest year-over-year rises in the proportion of investors planning to grow allocations, up by 15 and 13 percentage points, respectively.

Meanwhile, within real estate, data centers have become a top priority, with 65% of investors planning to increase allocations in this sector. This is fueled by soaring demand for digital infrastructure, according to Nuveen.

Strategists noted that private market assets tend to be “sticky”, as funding typically comes from outflows in public assets, cash reserves, and new capital. For those planning to reduce certain private market allocations, most are reallocating within private markets rather than exiting altogether.

The survey also found that investors are increasingly taking a dual approach to private investments. More are balancing broad asset classes like private equity, credit, infrastructure, and real estate with more niche opportunities in areas such as agriculture, hospitality real estate and asset-backed lending.