The investment appetite for private markets climbs higher as 70 per cent of advisers plan to raise clients’ allocations to the asset class.
A recent survey from private market investment firm Hamilton Lane, which canvassed over 230 global respondents, affirmed the growing demand for the asset class.
The research discovered that 92 per cent of those surveyed currently allocate client capital to private markets, with nearly all (99 per cent) planning to allocate some portion of client portfolios to the asset class this year.
Some 70 per cent of advisers are seeking to increase clients’ allocation to private markets compared to 2023. Performance and diversification were cited as the top drivers for the surge in demand for this investment area.
Moreover, over half of advisers reported their plans to allocate 10 per cent or more of their clients’ portfolios to private markets.
The survey also highlighted that the overwhelming majority of advisers reported a strong education in the asset class. Some 97 per cent of advisers either cited an advanced (55 per cent) or intermediate (42 per cent) understanding of private equity.
However, clients’ education and understanding of the asset class notably diverged from their advisers’ knowledge. Just 4 per cent of advisers rated their clients’ understanding of private markets as advanced or well-versed, while 50 per cent noted a beginner or little to no understanding.
The need for basic education, coupled with clients’ strong interest in the asset class, presents a strong opportunity for advisers, said Steve Brennan, head of private wealth solutions at Hamilton Lane.
“The punchline from this survey was an affirmation that as interest in private markets grows, there is a clear need for more education. We’ve found that a foundational understanding of the asset class affirms initial interest from new investors and contributes to a sustained investing appetite for those who are already allocated,” Brennan explained.
“We anticipate that, as private wealth investors become more knowledgeable about and familiar with the asset class, private markets allocations will likely also increase.”
Scott Thomas, Hamilton Lane’s head of private wealth for Australia, added that offering more opportunities for private wealth clients to gain a deeper understanding of private market investing can help both advisers and investors achieve their goals.
Demand for private markets has also been observed in the fund management landscape. Last week, Money Management reviewed four major M&A deals in the asset class since March as existing asset managers look to capitalise on the growth in alternatives.
