High-end investors persistently seek increased yields in the private market demand
In the face of continued economic and political unpredictability, a significant portion of investors in the United States are finding solace in the opportunity set offered by private assets. According to recent surveys, approximately 20% of investors are favoring this investment class.
This trend is not exclusive to the US, as high-net-worth and ultra-high-net-worth investors globally are increasingly allocating a substantial portion of their portfolios to private assets. Two-thirds of the surveyed investors aim for 10% or more of their portfolio in private assets, with one in four sophisticated investors directing at least 25% towards these assets.
The appeal of private assets lies in their potential for risk mitigation and return enhancement. During times of market volatility, these assets can provide a hedge against public market fluctuations, making them an attractive option for diversification.
Increased accessibility, thanks to platforms like iCapital and CAIS, is another factor driving more allocations to private assets. These platforms are making private investments more accessible to individual investors, including high-net-worth and ultra-high-net-worth individuals.
Positive performance, despite challenges in the broader market, is another reason for the increased interest in private assets. Buyout funds, for instance, have shown resilience and delivered positive returns, attracting more investment.
Claire Madden, founder and managing partner at Connection Capital, has stated that private equity continues to shine for their investor base. Madden also mentioned that clients see the potential to outperform and are prepared to commit significant capital accordingly. The potential for outperformance is the main reason for the continued strong demand for private assets, as cited by 78% of survey respondents.
In terms of future developments, the SEC's Office of the Investor Advocate has highlighted the potential for retail investors to access private funds through retirement plans, which could further democratize access to these assets. However, this does not directly address high-net-worth allocations but suggests a broader trend towards increased availability and interest in private assets.
Europe currently presents the most compelling investment opportunities, according to 31% of investors, with a quarter finding the UK the most attractive region. Connection Capital, a firm that provides private professional investors with access to direct private equity and debt transactions and private market alternative investment funds, has raised £550m of client funds as of the end of March 2025.
Interestingly, more than half of the investors (54%) plan to maintain their current allocation levels to private assets over the next 12 months, while almost a quarter of the investors plan to increase their allocation. Despite the appeal of more liquid investments, 85% of surveyed investors are willing to accept illiquidity associated with private market investments if returns are superior to more liquid investments. Only 15% of surveyed investors prefer more liquidity over lower target returns.
This continued strong demand for private assets, as indicated by Claire Madden's statement, suggests a positive outlook for this investment class in the coming months.
Businesses and investors worldwide are increasingly allocating a substantial portion of their portfolios to private assets, as these investments offer potential for risk mitigation and return enhancement. Approximately two-thirds of surveyed investors aim for 10% or more of their portfolio in private assets, with one in four sophisticated investors directing at least 25% towards these assets, highlighting the appeal of these assets for diversification and outperformance.
