CoreData Research’s recent study says that 27% of the European fund selectors reported a shift in investment focus from public markets to private ones.
The research also indicates that more than half of fund selectors say their firm plans to increase investment in renewable energy infrastructure over the next five years. And nearly four in 10 think private markets will be instrumental in achieving net zero. The firm said it had spoken with 130 European fund selectors in consulting the research.
Andrew Inwood, founder and principal of CoreData, said: “These findings show how private markets are fast becoming central to investment strategies as they move from the alternative to the mainstream. While private markets offer the prospect of superior, uncorrelated returns, they also present a broader opportunity set by tapping into structural trends at the forefront of economic and sustainable change.”
CoreData also said that a third (31%) of respondents think private markets will consistently outperform public markets going forward. Furthermore, half (51%) say low bond yields and rising inflation are compelling their organisation to look for opportunities in private debt.
While investors turn to private markets to generate superior returns, they are also searching for sustainable returns. Nearly four in 10 (38%) fund selectors think private markets will be instrumental in achieving net zero carbon emissions. This is fuelling demand for renewable energy — more than half of respondents (55%) say their organisation plans to increase investment in renewable energy infrastructure over the next five years. And a similar proportion (53%) think the role of real assets in the energy transition creates an unprecedented investment opportunity.
It also said that nearly eight in 10 (79%) fund selectors say a high level of internal expertise and resources is important when selecting an asset manager. A long track record managing private assets is the next most-valued manager capability (75%), followed by outperformance over recent years (68%) and the ability to embed ESG criteria into the private asset investment process (54%).