Over a third of millionaire private market investors plan to increase exposure

More than one in three (37 per cent) millionaires in the UK that are invested in private markets plan to increase their exposure over the next three years, research from Wealth Club has shown.

Its study found that 48 per cent of millionaires already had some exposure to private markets outside venture capital trusts, the Enterprise Investment Scheme, and seed enterprise investment schemes.

Private equity was the most common investment, with 81 per cent of those with private markets exposure allocating to the asset class.

More than a third (34 per cent) were invested in infrastructure, while both real estate and venture capital were invested in by 27 per cent.

The majority had less than 10 per cent of their portfolio allocated to private markets, with 36 per cent holding between 1 per cent and 5 per cent, and 35 per cent between 6 per cent and 10 per cent.

Millionaires who were not invested in private markets saw lack of knowledge or understanding as the biggest barrier, cited by 56 per cent, followed by illiquidity (42 per cent), valuation concerns (33 per cent) and lack of transparency (30 per cent).

Investment trusts were identified as the most popular structure for investing in private markets, with 78 per cent of existing private market investors using them, while 42 per cent were investing directly.

Just 9 per cent used semi-liquid funds, which Wealth Club said highlighted how new the structure remained for individual investors.

However, 24 per cent of millionaires saw semi-liquid private market funds as attractive, despite 31 per cent either not knowing what they are or not having an opinion.

“Private markets are quietly becoming mainstream for millionaires, with nearly half already having some exposure and more than a third of those investors planning to increase their allocation,” said Wealth Club founder and CEO, Alex Davies.

“The key attraction of private markets is that they offer access to a wider range of investment opportunities which were previously largely the preserve of institutional investors.

“Nearly six out of 10 millionaires in our survey believe the greatest investment opportunities over the next five years will come either from private companies or a mix of public and private companies.

“Investment trusts have traditionally been the main way individual investors have accessed private markets, but the arrival of semi-liquid funds is giving eligible investors another route.

“They are still relatively new and awareness remains low, but we expect them to become increasingly important as investors become more familiar with them.

“There are still barriers to investing in private markets, including lack of liquidity and understanding, but gradually these are being addressed by the sector.”

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