Institutional investors accelerate private market allocations amid diversification drive

A substantial majority of institutional investors plan to lift their exposure to private markets over the coming years, with private infrastructure, private credit and private equity singled out as priority areas, according to early results from Nuveen’s sixth annual EQuilibrium Global Institutional Investor Survey.

Nuveen’s preview, drawn from responses by 800 institutions across 30 countries representing nearly $17trn in assets under management, shows 81 per cent of respondents saying they will increase private-market allocations within five years. More than half of those investors expect the rise to be material, targeting an increase of between five and 15 percentage points to their private-market weightings. In the nearer term, 43 per cent of institutions plan to expand allocations to private infrastructure and private credit over the next two years, with private equity chosen by 42 per cent.

“The scale and pace of institutional capital flowing into private markets continues to be substantial,” Harriet Steel, global head of institutional distribution at Nuveen, said. “Institutional investors are taking full advantage of the powerful combination of benefits offered by private markets: diversification away from public market uncertainty, enhanced income generation, and the potential for improved risk-adjusted returns.” She added that the shift is likely to pick up speed as new technology arrives and investors seek resilience amid persistent volatility.

Nuveen’s survey also highlights a focus on diversification within alternative credit: 46 per cent of respondents identified diversification as a priority for their alternative credit allocations over the next five years. When asked which private fixed income sub-orders they favour, investors pointed to private investment-grade corporates and private investment-grade infrastructure debt (each at 44 per cent), followed by private asset-backed securities (40 per cent).

The Nuveen findings sit alongside research from other managers and industry polls that underscore a broader move into private assets. According to Aviva Investors’ 2026 Private Markets Study, based on 500 institutions with $6.5trn in aggregate assets, average allocations to private markets have climbed to 12.5 per cent of portfolios globally, with North American institutions averaging 14.4 per cent. Aviva’s analysis notes particularly strong year-on-year increases in North America, where allocations rose by nearly two percentage points.

Industry surveys from Natixis Investment Managers and Hamilton Lane reinforce the narrative of growing appetite, albeit with caution. Natixis reported heightened interest in private debt, 45 per cent of its respondents said they plan to increase private-debt allocations, while 66 per cent remain positive on private equity even as 78 per cent apply greater deal scrutiny because of concerns about overcrowding. Hamilton Lane’s Global Private Wealth Survey found 86 per cent of private wealth professionals intend to boost private-market investments in 2026, with portfolio optimisation driving the shift and venture capital and growth equity emerging as favoured strategies.

Family-office polling by Institutional Investor mirrors these trends: a majority expect to either raise or maintain private-market exposures in 2026, with a significant portion forecasting stronger returns from private investments in the medium term and some families already allocating sizeable shares of their portfolios to private strategies.

Taken together, the studies suggest two themes shaping institutional strategy. First, private markets are increasingly viewed as a tool for diversification and income in an uneven public-market backdrop. Second, heightened demand is accompanied by greater selectivity: investors are targeting specific private-credit and infrastructure niches while increasing diligence to guard against valuation and liquidity risks.

Market participants caution that the rush into private assets is not without challenges. Fundraising in parts of the private-markets ecosystem has cooled, and some industry commentators have warned of a “reality check” as investor expectations meet the practical constraints of sourcing attractive, deployable deals at scale. Nuveen’s survey acknowledges those structural questions but frames the flow of capital as an enduring reallocation rather than a short-term rotation.

As institutional allocations to private markets deepen, the implications for portfolio construction, manager selection and secondary-market liquidity are likely to grow. Industry data and manager studies indicate that geography, strategy and access will determine how different institutions manage the transition, with North American investors currently leading on average exposure while Europe and Asia-Pacific trail but continue to increase allocations.