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85% of global institutional investors expect private markets to outperform public markets in the long term

Friday, March 05, 2021
Opalesque Industry Update - A new global research program conducted by The Economist Intelligence Unit (EIU) and supported by Adams Street Partners (Adams Street) finds that 85% of global institutional investors expect private markets to outperform public markets in the long term, with 80% of respondents agreeing that these markets are less susceptible to volatility.

This study also found that 86% of these investors believe that the continued spread of COVID-19, as well as issues with vaccine distribution, will have a major impact on private market strategies as we make headway into 2021 - only 13% believed that their portfolios would be minimally impacted.

Anxiety about the pandemic is not the only concern for investors - an overwhelming majority view geopolitical risk as a critical factor when assessing private market opportunities.

The findings are part of a research report, "Leveraging Opportunity in Change: Navigating the Trends Shaping Private Markets in 2021 and Beyond," written by the Economist Intelligence Unit and published by private markets firm Adams Street Partners.

The report is based on in-depth qualitative interviews and survey data collected from 110 institutional private markets investors, including pension funds and investment managers in Asia, Europe, and North America.

Jeff Diehl, Managing Partner and Head of Investments at Adams Street, said, "The behavioral changes we have seen during the COVID-19 pandemic have made a lasting impact on private market investors, accelerating structural changes that were already underway. We believe private markets are well-positioned to be a driving force behind long-term innovation, job creation, and growth on the global stage."

Additional takeaways from the study include:

Assessing Globalization Risks: 82% of investors said that growth in anti-globalist policies, such as trade barriers and tariffs, are a top risk for private markets. Similarly, 89% of respondents consider a company's degree of digitisation as an important factor when assessing new investment opportunities.

ESG is Key: 85% of respondents believe that the return value of an investment can be enhanced by incorporating ESG factors into the decision-making process.

New Opportunities in Global Markets: 42% of surveyed investors expect that the Asia-Pacific region will have the best private markets opportunities this year, with North America close behind.

Pandemic Trends Remain Strong: Sectors that delivered during the pandemic remain favored by investors for 2021: Financial Services, Tech, Healthcare, and Telecom received high marks from respondents.

What do you think?

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