Investors to increase private markets allocation, study finds

Investors intend to increase their exposure to private markets in a bid to navigate uncertainty in 2020, a survey has found.

More than half of institutional investors are likely to up their exposure to real assets, while 46% are looking to raise private equity allocations.

At a global level, 53% of investors intend to increase allocations to private credit as well.

But allocating capital to private markets comes with its own challenges for some investors, according to the study by BlackRock.

Just under a quarter of those surveyed said there was a lack of attractive valuations in private markets, while only 15% say they face no challenges at all.

Mark McCombe, chief client officer at BlackRock, said: “The survey results show that clients are looking to build resilience into their portfolios by increasing their allocations to less correlated exposures.”

“This approach can help deliver robust long-term returns, and it may provide ballast against equity market shocks, such as the one driven by the recent spread of the coronavirus.”

Another notable finding of the report is that 91% of investors in Europe, Middle East and Africa already implement ESG. In the US and Canada, less than half do so.

“As institutions become aware of growing sustainability-related risks, particularly climate change, and their effects on investment outcomes, we believe this will continue to be a driving force in asset allocation shifts in the years ahead,” McCombe added.

© 2020 funds europe

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