Private assets will continue to grow as a percentage of global portfolios, with income generation being the chief driver of allocation decisions, according to BlackRock Alternatives’ first Global Private Markets Survey.
Survey respondents included senior executives and allocators at more than 200 institutions in 22 countries, representing an estimated 25% of the entire global private markets’ institutional investment world. In total, the participants manage $15 trillion in assets, $3.2 trillion of which is invested in private markets.
Globally, more than 70% of the respondents reported they would increase private investments in 2023. More than half said they would boost private credit holdings, with numbers increasing in the Asia-Pacific region, to 66%.
“Sophisticated investors have moved on from the 60/40 allocation model,” Edwin Conway, Global Head of BlackRock Alternatives, told Yahoo Finance. “Despite broad market declines last year, recession concerns and recent market turmoil, we see that short-term uncertainty is not derailing the growth of private markets."
After income generation, which 82% of participants cited as the chief factor in determining allocations, capital appreciation was the second most compelling concern, according to the survey.
Within asset classes, investors have choices. In private equity, mature companies were seen as the most attractive opportunity for returns, followed by venture capital, secondaries, and buyouts. In private credit, investors reported seeing opportunities in infrastructure or real estate debt, due to U.S. infrastructure legislation and a dislocation in property values following increased interest rates. Distressed strategies were reported as attractive investments as well. In infrastructure, respondents saw emerging markets as the greatest opportunity, followed by transportation and renewables.