A survey of private markets professionals released by Wellington Management reveals that the majority are optimistic about their private markets’ allocation.
The Wellington Private Investing Survey, which captured responses from more than 165 private markets professionals including limited partners (LPs), general partners (GPs) and service providers, revealed an overwhelming majority of LPs (96 per cent) plan to increase (53 per cent) or maintain (43 per cent) their allocations. Only 4 per cent of LP respondents indicated they would decrease their private markets allocation in the next year.
The survey, which was conducted in June at global private markets conference SuperReturn International in Berlin, shows this optimism persists despite the fact that LPs remain concerned about the impact uncertainty will have on private markets over the next 12 months. A large majority (64 per cent) say either political uncertainty or tariffs are the key risk for private markets in the coming year.
Wellington also explored LPs’ attitudes towards the trend of convergence between public and private markets. The majority (51 per cent) of LPs believe that a blended public-private strategy can enhance portfolio performance. On combining public and private markets strategies, 63 per cent said they would consider it, with ‘having a more holistic view of all investments’ cited as the top benefit (19 per cent), followed by ‘easier access to research and insights’ (16 per cent). Additionally, LPs expect equities to be where they see the greatest convergence in public and private markets compared to other asset classes, such as credit and real estate.
Commenting on the results, Laura Kirk, Head of Private Investments Capital Formation at Wellington Management, says: “At Wellington, our private markets investment teams are supported by the broader research and investment insights of our public market analysts to achieve the best results for our clients. This collaboration provides a fuller picture of industries and sectors, as well as potential investment opportunities. It is encouraging to hear LPs also recognise how powerful a combination of public and private expertise can be for their clients.”
Kalyani Harar, Director of Private Investments at Wellington Management, says: “Despite last year’s challenges in private markets, the Wellington Management Private Investing Survey reveals LPs are still optimistic about private markets and see ongoing opportunities.
“’Given the uncertain macro environment, many LPs have taken steps to diversify their historically concentrated allocations away from traditional strategies and include the likes of secondaries and growth in their portfolios going forward. This is driven by both liquidity benefits and, for growth, reduced direct exposure to interest rate volatility.”
Additional findings from the Wellington Private Investing Survey include:
Only one in 10 of LPs decreased their private markets allocation in the last 12 months
Almost half of all respondents (48 per cent), including LPs, GPs and service providers, see political uncertainty as having the biggest impact on private markets over the next 12 months
The US had the highest percentage of respondents that increased their private markets allocation in the last 12 months (73 per cent)
Looking at regions specifically, Europe and the Middle East are the most bullish on private markets, where respectively 65 per cent and 64 per cent of all respondents plan to increase private markets allocations over the next 12 months.
