Asset managers on the continent that develop private asset products can expect to see “significant business” within the next five years, a report from Cerulli Associates has suggested.
According to European Alternative Investments 2023: Helping Investors Diversify, while institutional investors remain the region’s major allocators to private assets, “a latent market” for high-net-worth and ultra-high-net-worth investors also exists, which Cerulli argued was underexposed to the asset class.
“Half of the German and around 40% of the Swiss and UK private banks and wealth managers plan to increase their allocations to private equity growth strategies over the next 12 to 24 months,” said Justina Deveikyte, director of Cerulli’s European institutional asset management research. “They already have significant allocations to private equity strategies, yet private banks and wealth managers generally remain bullish on private equity.”
Real estate allocations
The firm went on to argue that, while private banks’ and their clients’ demand for private equity and infrastructure funds would remain strong, their demand for real estate is expected to decrease over the next 12 to 24 months.
One-fifth (20%) of the French private banks and wealth managers Cerulli surveyed, for example, plan to reduce their recommended allocations to real estate while around 13% of UK and Italian respondents anticipate decreasing their recommended allocation to the asset class over the same period.
According to Cerulli, the report draws on the firm’s interviews throughout the year, as well as 38 dedicated interviews exploring the European alternative investment landscape with institutional investors, wealth managers, private banks and alternative asset managers. The research was also supported by two proprietary surveys, one of European private banks and wealth managers and one of European institutional investors.
In total, 153 private banks and wealth managers across five markets – France, Germany, Italy, Switzerland and the UK – completed the European private bank and wealth manager survey, conducted in January 2023. A total of 207 European pension funds and insurance companies across the same five countries, as well as the Netherlands and the Nordic regions, completed Cerulli’s European institutional investor survey, conducted between December 2022 and January 2023.