Wealth managers and independent financial advisers (IFA) are planning to increase their clients’ exposure to private markets, according to research commissioned by Wealth Club.

The study, conducted by Pureprofile, found that wealth managers and IFAs were increasingly favouring private markets due to volatility in global stock markets, consistent attractive returns, and a recent lack of initial public offerings (IPO).

Private equity, real estate, venture capital, private debt, and infrastructure were the primary private markets that financial intermediaries were recommending.

Almost half (41 per cent) expected inflows from investors into venture capital to increase from 5 per cent to 10 per cent over the next 10 years compared to the previous five-year period.

Furthermore, 38 per cent predicted the same increase in private debt and infrastructure investments, while 37 per cent forecast the same increase in private equity investment.

All the wealth managers and IFAs surveyed expected to see more investor wealth being put into private markets overall over the next two years, with 70 per cent predicting an increase of between 25 per cent and 50 per cent.

Over one in 10 (11 per cent) believed the rise would be between 10 per cent and 25 per cent, while 19 per cent forecast an increase of between 50 per cent and 75 per cent.

The vast majority (87 per cent) expected stock market volatility to increase slightly over the next 12 months, 9 per cent believed the increase in volatility would be dramatic, and 4 per cent felt it would stay the same.

More than half (58 per cent) forecast the value of private market funds to hit $20trn by 2031, up from the current value of $13.1trn.

Commenting on the findings, Wealth Club founder and chief executive, Alex Davies, said: “The shifting sands of global stock market volatility is driving investors towards more stable assets, our research reveals.

“Returns from private markets can be reasonably uncorrelated with this global uncertainty, so it is clear why IFAs and wealth managers consider these a no-brainer for some of their sophisticated and high net worth individual investors.

“With more and more companies delisting from stock markets or staying private for longer it also gives them a far greater investment pool from which to choose.”

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