Nearly 60% of financial advisors plan to allocate a significant portion of their book of business to private market investments this year, reflecting growing interest among clients, a survey from Hamilton Lane found.
Nearly a third, or 30%, of advisors plan to allocate at least 20% of their book to private market investments, according to the private markets investment management firm's second annual Private Wealth Survey, released Wednesday. Another 29% of advisors surveyed reported plans to allocate 10% or more to the asset class.
That 59% overall planning to allocate at least 10% to private markets represents an increase of 15 percentage points from a year earlier. Moreover, 84% percent of advisors plan to allocate at least 5% to private markets, representing a 14-percentage point year-over-year boost, according to the survey.
Among the 320 advisors surveyed, over half plan to increase their allocations this year. The survey also found an increase of 15 percentage points in clients classified as “very interested” in private markets compared with the prior year.
“This year, our survey results showed a growing enthusiasm around and appreciation for the diversification and performance benefits the private markets can provide. Just a few years ago, we would never have expected to see nearly 60% of advisors planning to allocate 10% or more of clients’ portfolios to this asset class in the coming year,” said Steve Brennan, Hamilton Lane's head of private wealth solutions.
“To us, this reinforces the growing understanding of the wealth creation opportunities within the private markets,” Brennan added.
The online survey, conducted from Oct. 29 to Dec. 4, included advisors from private wealth firms, RIAs and family offices globally.
Private infrastructure is poised to gain market share, with 48% of respondents planning to increase exposure in that sector, Hamilton Lane said. This finding affirms a broader trend of growing investor interest in private infrastructure as the benefits become more widely understood, the firm said.
While infrastructure saw the biggest increase in interest, private equity and private credit followed closely behind, with those strategies in the top two spots in terms of overall portfolio allocation, Hamilton Lane said.
Over 75% of advisors surveyed reported that their clients see private markets as providing higher reward compared to stocks and bonds, although many consider them to be higher risk, the firm said.
Among other key findings, advisors said they offer private market investments partly to gain a competitive edge in attracting and retain]ing clients; 70% of advisors indicated that helping clients invest in private markets deepens those relationships.
While all age groups show an interest in private market exposure, interest is highest among Gen Xers, at 94%, millennials at 89%, baby boomers up to age 75 at 77%, Gen Z at 59% and clients older than 75 at 43%, advisors indicated.
Sixty-three percent of advisors rated their knowledge of the asset class as “advanced” compared to 55% in last year’s survey, reflecting a persistent knowledge gap among the remainder of the respondent base, the firm said.
Hamilton Lane employs about 730 professionals globally, with more than $947 billion in assets under management and supervision, composed of more than $131 billion in discretionary assets and about $816 billion in non-discretionary assets.
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