A rebound on the global stock markets has failed to entice institutional investors back to equities, with managers favouring private markets and defensive assets, finds Gill Wadsworth, reporting on the latest report from investment consultants bfinance.
Private markets accounted for 49 per cent of new manager searches in the 12 months to June 2025 and private debt remained the largest segment at 43 per cent of private market searches, driven by allocations to direct lending, asset-backed finance, and capital preservation strategies.
Infrastructure searches surged from 8 per cent to 17 per cent year-on-year as institutions sought long-duration, inflation-linked returns.
bfinance’s Oliver Wade says: “Although headline risk appetite appears stable, investor behaviour tells a more cautious story. Institutional portfolios are increasingly tilting toward liquidity, quality and diversification. The continued strength of private markets, particularly in infrastructure and private debt, reflects a deliberate effort to hardwire resilience into portfolios. Demand is more targeted and risk-aware, with investors positioning for a world that may be more inflation-prone, less dollar-centric, and less reliant on US market leadership.”
Meanwhile, in the US, Cerulli Associates have noted that US endowments are re-evaluating their investment strategies, driven by economic uncertainty and policy changes, including the potential increase in endowment taxes and cuts to federal funding.
“Amidst an evolving landscape, universities may adopt more cautious liquidity management strategies, such as increasing cash reserves, cutting expenses, repositioning their endowment holdings, or participating in the secondary market,” says Agnes Ugoji, analyst. “While large institutions may weather the storm, mid-sized and smaller endowments lacking scale and internal resources could fall behind,” she adds.
Cerulli predicts smaller institutions will increasingly rely on outsourced chief investment officers (OCIOs) to manage complexity and strengthen their investment goals. OCIO use among endowments is highest among small and medium-sized segments (USD100 million to USD500 million in AUM), and the majority of OCIO providers expect endowment clients to drive most of the growth for the OCIO industry over the next two years.
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Beverly Chandler, Managing Editor, Institutional Asset Manager
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