Some 82% of UK wealth managers and IFAs expect retail inflows into private equities to increase materially over the next five years, according to research from Wealth Club.
The study, which comprises 100 investment professionals running a combined £332.7bn, found 53% of respondents expect this to be a “dramatic” rise.
At present, 4% of wealth managers already have more than half of their clients invested in private markets. This is expected to treble over the next three years to 13%.
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For over half (52%) of wealth managers and IFAs surveyed, 10-15% of their clients already have private market exposure. But while 57% of respondents currently use investment trusts to access private markets for clients, this number is expected to fall to 48% over the next three years, which the report said is owing to the increase in open-ended semi-liquid vehicles.
In fact, these so-called “evergreen” funds are expected to increase in use from 43% to 48% over the same time frame, drawing parallel to their closed-ended counterparts.
Alternative assets
Private credit is also expected to increase in popularity, with 65% of respondents believing inflows will increase over the next five years. Some 39% believe this increase will be “dramatic”.
Elsewhere across alternative assets, 75% believe infrastructure allocations will increase over the next half-a-decade. Two thirds (66%) believe real estate inflows will rise, while 11% believe allocations will fall.
Some 61% of wealth managers and advisers believe venture capital allocations will rise, although more than a third (35%) believe allocations to the asset class will hold steady.
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Alex Davies, founder and CEO of Wealth Club, said: “These findings suggest private markets are becoming an increasingly important part of wealth management portfolios in the UK.
“Advisers are not only expecting more clients to invest in private markets, they’re also expecting those clients to allocate a greater share of their wealth to the asset class.”
He added: “The direction of travel is clear. Private markets are moving from being a niche allocation to becoming an increasingly important part of a well-diversified long-term portfolio. Investors who ignore them risk missing an increasingly important source of long-term growth.”
