Exposure to private markets is now a “necessity” for high-net-worth investors looking to capture a broader spectrum of growth opportunities, according to advisers and wealth managers.
New research by Wealth Club showed 94% of UK-based wealth managers and advisers believe relying solely on a conventional listed equity portfolio means sophisticated investors risk missing out on the “wealth generation engines of the modern economy.”
This includes nearly a third (31%) who strongly agree that clients need exposure to private markets to access a broader range of growth opportunities.
Wealth Club said its study evaluated the explicit benefits that private markets provide over traditional 60/40 portfolios. Almost three quarters (72%) of advisers highlighted the enhanced long-term capital growth benefits, while 48% stated inflation protection and 47% cited access to unique, non-public market sectors.
A third (35%) of respondents also pointed to the benefit of reduced portfolio volatility and 26% stated lower correlation with public markets.
Furthermore, 89% of wealth managers and advisers said capturing the high-performing growth phase of a company’s lifecycle is critical, with 30% deeming it as essential.
This trend is expected to last, with more than nine out of 10 (92%) respondents anticipating the need for retail and high-net-worth investors to be exposed to private markets to accelerate over the next five years.
Alex Davies, founder and CEO of Wealth Club, said: “These findings suggest private markets are approaching a tipping point among individual investors in the UK. For decades, pension funds, insurers and endowments have used private equity and private credit as important components of their portfolios. Increasingly, wealth managers and IFAs believe suitable investors should also have the opportunity to access these strategies.
“With companies staying private for longer, much of the potential upside now comes before they reach public markets. By the time they list, investors have often missed a significant part of their growth.
“Private markets are moving from being a niche allocation to becoming an increasingly important part of a well-diversified long-term portfolio. Investors who ignore them risk missing an increasingly important source of long-term growth.”
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