Two-thirds (66 per cent) of large institutional asset owners say they plan to increase their allocations to private markets over the coming year, according to a new survey by Mercer.

The survey, which polled about 60 global asset owners, found among those planning to increase their private market investments, 50 per cent said they’re pivoting to infrastructure, followed by private credit (39 per cent) and private equity (30 per cent).

In terms of the risks they expect to face over the next 12 months, respondents cited stagflation (36 per cent), geopolitics (32 per cent) and volatility in public markets (26 per cent).

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The survey also found 18 per cent of asset owners said they manage private market investments in-house. “[Asset owners] have a clear understanding of what they do well in-house and where they benefit from external expertise,” said Rich Nuzum, executive director of investments and global chief investment strategist at Mercer, in a press release.

“With [asset owners] planning to add to their positions in private equity, private debt and infrastructure in the next year, the trend towards outsourcing could accelerate. . . . Back and middle-office risks, such as those relating to governance, operations, talent and regulation, are also in significant focus.”

Half (50 per cent) of asset owners also said they plan to increase their allocations to sustainable investment strategies. While 55 per cent said they’ve set net-zero emissions targets, fewer than a third (29 per cent) have actually implemented them. Roughly half (47 per cent) of asset owners said they’ve set a target of 2050, while just five per cent have set a 2030 target.

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