Private markets a ‘critical factor’ to wealth managers’ success
Nearly half of wealth managers across the globe say offering access to private markets is integral to their growth plans, research has uncovered.
Natixis Investment Managers’ 2025 Wealth Industry Survey canvassed 520 individuals responsible for running investment platforms and managing client assets in 20 countries.
Alongside growing their service offering (56 per cent) and tapping into new client segments (48 per cent) to drive growth, nearly half (48 per cent) of wealth managers said meeting client demand for private markets would be a “critical factor” in their expansion plans, the report said.
However, respondents were divided on how access to the limited pool of unlisted assets would tangibly impact their business. Some 26 per cent said access, or lack thereof, is a threat to their practice, while an additional 37 per cent stated that access poses no threats.
“Most confident are the 37 per cent who say private assets represent an opportunity to grow the business,” Natixis IM said.
Given these findings, the report highlighted alternatives as playing a more significant role in investment portfolios, accounting for 17 per cent of global allocations in moderate risk portfolios. This was alongside equities at 44 per cent globally, fixed income at 33 per cent, and cash at 5 per cent.
Portfolio allocation in APAC painted a similar picture, with the region allocating 43 per cent to equities, 32 per cent to fixed income, 17 per cent to alternatives, and 7 per cent to cash.
Latin America exhibited the highest allocation to alternatives at 21 per cent, while the UK was at 19 per cent, Europe at 17 per cent, and North America at 15 per cent.
Natixis IM said: “On one hand, private assets have the potential for higher returns and bigger yields. On the other hand, since private assets are not marked to market, they have historically been less volatile. In essence, the move towards increased allocations to private assets shows analysts are willing to trade liquidity for other potential benefits.”
Diversification sat at the top of the list for benefits posed by alternatives, followed by return enhancements, reducing portfolio volatility, enhancing risk management, and tax efficiency.
The report also looked into wealth managers’ preferred vehicles for private assets. Just over 50 per cent of firms are looking to traditional drawdown funds as their vehicle of choice.
Evergreen and open-ended funds are being used by 48 per cent of those surveyed, which were previously predicted to become a major part of the private markets landscape.
These structures currently account for approximately 5 per cent of the broader private markets, representing $700 billion. According to Hamilton Lane, evergreen funds are poised to take up at least 20 per cent of total private markets in a decade’s time.
Beyond traditional drawdown funds and evergreen structure, Natixis IM said another 35 per cent are harnessing semi-liquid funds and 28 per cent are using feeder/access funds.
“More money chasing fewer deals, coupled with high investment minimums and long lockup periods, has created demand for innovative solutions for private market investment, and wealth managers are taking note,” the report said.
AUTHOR
Jasmine Siljic
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