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Laxman Pai, Opalesque Asia:

Asset managers expect to increase their median allocation to private market assets from 30% to 35% in the next 3-5 years, while asset owners plan an increase from 22% to 28%, said a study.

The demand for private markets investments by asset owners and managers is expected to rise in the next three to five years as investors seek higher yields and greater diversification, according to the recent survey that State Street conducted with 170 private market asset managers and asset owners.

Respondents identified the most significant drivers of this momentum to be diversification from listed markets (59% of asset managers and 67% of asset owners) and better opportunities for return generation (52% of asset managers and 52% of asset owners). Forty percent of asset managers also identify private markets as an attractive and/or stable source of yield.

However, there are significant barriers to investing in private markets. 64% of respondents are concerned about weak standards of accounting and audit controls, 60% about high management fees relative to public markets, and 58% about lack of uniform data standards.

To maximize the next stage of growth in private markets and meet rising investor expectations, asset managers will have to improve their data management and reporting processes and adopt more sophisticated technologies.

The survey found that data quality and standardization is key barrier to increasing private markets allocat......................

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