Constructive But Selective
Despite geopolitical uncertainty, inflation concerns and liquidity constraints, institutional investors remain committed to private markets. Most respondents view opportunities across private equity, private credit and infrastructure as equal to or better than last year, and more than a third expect to deploy more capital. As a result, investors are not retreating from private markets, but becoming more selective in how they allocate capital, manage liquidity and choose investment managers.
Reshaping the Landscape
Many remain under allocated to private markets, particularly private credit and infrastructure, suggesting continued room for capital deployment. While slower distributions continue to constrain new commitments, investor appetite remains resilient. In response, investors are placing greater emphasis on liquidity management, with secondaries and co-investments becoming increasingly important components of portfolio construction.
Manager Selection in the Age of AI
Manager quality remains a key driver of capital allocation decisions, with investors increasingly focused on underwriting discipline, specialist expertise and differentiated investment approaches. At the same time, respondents identified artificial intelligence as the leading force expected to reshape the private markets industry over the next five years. Together, these trends suggest investors are raising the bar for manager selection, seeking firms with both proven investment capabilities and the ability to adapt to structural changes across private markets.