Nearly three in 10 European financial organizations are showing interest in private markets despite rising inflation, reveals a new study by CoreData Research.
The study included 130 European fund selectors of which 27% stated their organization shifts its investment strategy from public to private markets, because the latter provides better return opportunities.
Half of them answered that low bond yields and the current inflation rise are driving investors to search for profit in private debt markets. Additionally, almost one in three participants in the survey thinks that private markets will surpass public markets in the years to come.
In its study, CoreData Research uncovered that fund selectors turned to private markets, because they wanted to work on the development of sustainable strategies. Almost four in 10 (38%) fund selectors think that the private market will play a vital role in obtaining the net-zero carbon emissions policy.
This encourages the demand on the renewable energy market. More than half (55%) of the respondents believe that their organization intends to invest more in renewable energy infrastructure in the near future.
Also, a similar percentage (53%) shares the opinion that real assets in energy transition present an extraordinary investment chance.
Andrew Inwood, the founder and principal of CoreData Research, specified that the findings show how private markets were quickly becoming central to investment strategies as they moved from the alternative to the mainstream.
He added that while private markets offered the prospect of superior, uncorrelated returns, they also presented a broader opportunity set by tapping into structural trends at the forefront of economic and sustainable change.
Apart from these particular qualifications, fund selectors support the key players. Of the respondents, 40% say they favor important global asset managers when investing in private markets. Still, there are 17% who say otherwise.
While making the selection of an asset manager, for 79% of the fund selectors, it is vital to keep a high level of internal expertise and resources.
However, some respondents show concern about the change that the investment activity may do to these assets if they gain popularity.
