Investors tap private assets in prime economies for diversified gainsStudy of 250 allocators in EMEA representing $10tn AUM reveals geographic preferences of institutional allocators: Download the research here.Institutional allocations to private market assets are expected to increase among investors in Europe and the Middle East amid growing concern for geopolitical risks and spikes in market volatility, according to new research from PGIM and Institutional Investor’s Custom Research Lab. Data from the PGIM/II study, What’s Your Alternative? found that private alternatives currently make up approximately 25% of the portfolios of the 250 institutions from the EMEA region surveyed in the study, which in total manage approximately $10 trillion in assets. Among study participants, more than 75% plan to increase their allocations to private alternatives over the next two years.Geopolitical and market risks are top of mind among study participants, as a solid majority – 58% – anticipate geopolitical risks to become more acute in the years ahead. Their concern is likely to be tied to uncertainty about the tariff and trade policies of the new administration in the United States and the prospect of military conflict in Eastern Europe, the Middle East, and elsewhere, along with the lingering effects of the monetary response to the global pandemic.Investors in the study are especially interested in investing in private markets in Asia-Pacific and Europe.In aggregate, 64% of respondents anticipate increasing holdings in the developed markets of Asia-Pacific. A solid majority of respondents – 61% – expect to augment holdings of private assets in the emerging markets of Asia-Pacific.Asia Pacific and Europe are preferred destinations for capital, while investments in LatAm and China are likely to wane in the next two years.Source: PGIM and Institutional Investor Custom Research
Thanks to its high economic growth potential and strong demand for infrastructure funding, the Asia-Pacific region is poised to attract substantial investment from institutions around the world. Institutions are well positioned to fill the $1.7 trillion funding gap in the region’s infrastructure financing requirements identified by the Asian Development Bank as required to maintain economic productivity.This funding shortfall is unlikely to be filled by public financial markets and offers further opportunities for institutional investor participation through private debt and equity placements.Enthusiasm is also high for investment in Europe, as nearly 60% of respondents plan to increase their allocations in the emerging and developed economies of Europe over the next two years. Similarly, a majority of survey respondents (55%) expect to increase their allocations to private assets in the United Kingdom over the period.Investors in the study are less sanguine about the private markets of China and Latin America. Across the full sample, 43% of respondents expect to reduce t
