There is a current trend for fund selectors to shift their investment strategy from public markets to private markets. This development has seemingly come about due to performance with many fund selectors stipulating that private markets will offer stronger returns going forward. Another cause for this shift is because of the ESG benefits attributed to private markets and the role they will play in the push to net zero, for example renewable energy infrastructure.
However, the more investment there is into private markets, the more saturated the market will become, and the market can become less appealing. It could prove difficult to allocate capital within the sector and the private markets could subsequently be subject to tighter regulation.
Either way, it is clear that private markets are becoming a key part of investment strategies as they move from “the alternative to the mainstream”.
"While private markets offer the prospect of superior, uncorrelated returns, they also present a broader opportunity set by tapping into structural trends at the forefront of economic and sustainable change."