A "Global Private Investment Markets Study" conducted by Research in Finance in collaboration with Neuberger sheds light on the expectations of European fund selectors regarding future investments in private markets. The study, which surveyed the assessments of 1,051 fund selectors from various European markets – including 715 representatives from the retail segment and 336 institutional investors – illustrates an emerging shift in investment strategies. Accordingly, an increased commitment to these illiquid asset classes is expected in the future, accompanied by growing acceptance and proliferation of new fund structures such as ELTIFs.
The study results indicate that fund selectors' net allocation intentions in the retail segment are positive across all seven private markets asset classes examined. A significant majority of respondents who are already invested intend to maintain or increase their existing target allocations. Specifically, the proportion of European retail/wholesale investors investing in private markets is expected to rise from the current 63 percent to nearly 88 percent within the next five years. For institutional investors, where the proportion is already 75 percent, an increase to 85 percent is predicted, indicating an expanded investor base, particularly in the retail and wealth management sectors.
Challenges and Benefits
Despite the forecasted growth, the study continues to identify relevant hurdles. A lack of liquidity is cited as the biggest obstacle by 65 percent of respondents, an increase from 57 percent in the previous year. Respondents also expressed concerns regarding a lack of transparency (48 percent) and high minimum investment amounts (37 percent). Nevertheless, in the perception of European fund selectors, the advantages of private markets investments outweigh the disadvantages. Portfolio diversification remains the most frequently cited benefit at 74 percent, followed by high return opportunities, emphasised by 55 percent of respondents. Positively, the proportion of those who view a lack of access as an obstacle has decreased from 26 percent in the previous year to 21 percent.
Allocation intentions for the next twelve months show a clear trend: 37 percent of European investors plan to increase their private equity allocation. For unlisted infrastructure investments, this figure is 29 percent and for private credit it is 25 percent. Familiarity with ELTIFs is also continuously increasing; 74 percent of fund selectors are now familiar with this fund structure, compared to 68 percent in the previous year. Already, 21 percent recommend ELTIFs to their clients or invest themselves, compared to 13 percent in the previous year. A further 18 percent plan to start such investments within the next twelve months, with evergreen structures being preferred in most European markets.
Importance of Manager Selection
Jesco Schwarz, Head of Intermediary Client Group for Germany and Austria at Neuberger, stated that private markets have become increasingly established. He attributed this to broader access opportunities, growing investor understanding and strong demand for diversification. The ongoing momentum in ELTIFs and evergreen products is encouraging. Investors are using more flexible and user-friendly access to private markets to complement their existing investments in closed-end funds. Schwarz emphasised that in private markets, the selection of the manager is a decisive factor, as top-quartile managers have consistently outperformed other providers in the past. He expressed the conviction that manager selection, investor education, appropriate product design and high-quality investments are essential to achieve attractive long-term results for clients.
