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Asset Management / Wealth Management
Client education to boost appetite for private markets
Investment advisers plan to increase allocations to alternatives but client knowledge about asset class still at beginner level
The Asset 7 Jun 2024

Investors are showing an increased appetite for private market assets which offer potentially higher returns and diversification benefits, a new survey finds.

More than 90% of respondents in a survey conducted by private markets investment manager Hamilton Lane among investment advisers currently allocate client capital to private markets, with essentially all of them (99%) planning to allocate some portion of client portfolios to the asset class this year.

More than half of advisers (52%) plan to allocate at least 10% of their clients’ portfolios to private markets, and 70% of them intend to increase such allocations this year.

Advisers cite performance and diversification as the top reasons for the spike in interest in the private markets.

As to their level of knowledge of the private markets, 97% of advisers report either advanced (55%) or intermediate (42%) understanding. But while advisers are knowledgeable, their clients may not be.

Advisers acknowledge that their clients believe alternatives may provide portfolio benefits but may not be educated enough on the asset class.

About half of respondents rate their clients’ knowledge about private markets investments as beginner, or having little to no knowledge of the asset class and requiring basic education, despite their strong interest in private markets.

Only 4% of advisers rate their clients’ knowledge about private markets as advanced or well-versed enough to talk about private market details, trends, and products.

“The punchline from this survey was an affirmation that as interest in private markets grows, there is a clear need for more education,” says Steve Brennan, head of private wealth solutions at Hamilton Lane.

“We’ve found that a foundational understanding of the asset class affirms initial interest from new investors and contributes to a sustained investing appetite for those who are already allocated. We anticipate that, as private wealth investors become more knowledgeable about and familiar with the asset class, private markets allocations will likely also increase.”

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