Bringing you live news and features since 2006 

ESG

Retail investors developing a taste for private markets

RELATED TOPICS​

Retail investors are increasingly drawn to private markets, attracted by the offer of diversification, alternative income, and sustainable investment opportunities, according to the latest issue of The Cerulli Edge – European Monthly Product Trends Edition.

“The alternative investments that retail investors are expanding into include hedge funds, private equity, venture capital, and private debt,” says Fabrizio Zumbo, associate director, European asset management research at Cerulli Associates, a global research and consulting firm.

One of the main reasons for the attraction to private markets is the hunt for returns that are relatively uncorrelated to mainstream asset classes such as equities and bonds.

Cerulli maintains that the traditional 60/40 split is no longer enough to meet investors’ diversification requirements or help them reach their long-term goals. When the value of standard asset classes comes under pressure from falling markets, geopolitical events, or economic factors, private market assets are able to provide a smoothing effect on a portfolio’s volatility that, in turn, allows for more sustainable, long-term returns.

Data published by the UK’s Investment Association shows that the number of listed companies available to UK asset managers has fallen in recent years, suggesting that listing on a public market is becoming a less favoured route. Debt, by comparison, is now considered a more attractive way of raising capital.

According to alternative data firm Preqin, 62 per cent of investors and 61 per cent of fund managers considered the end of 2018 the peak of the market cycle.

“A busy macroeconomic landscape is prompting retail investors to look more closely at their portfolios. They are becoming more risk averse and using private markets as a diversifier,” says Zumbo, adding that attractive levels of yield are becoming increasingly difficult to find in more traditional sectors.

Although retail investors can find accessing private markets via open-ended funds tricky, because many require a large minimum investment, several exchange-traded funds are on offer.

“The market is shifting and with slowing rates of economic growth, low bond yields, and a significant global focus on the environment, private assets will play an ever-increasing role in the retail investor’s portfolio,” says Zumbo.

Latest News

Raymond James Investment Management plans to launch an ETF product platform in 2025 to support strong client demand in alignment..
Aniket Ullal, Director of ETF Data and Research at CFRA Research, has written a note looking at ETFs with exposure..
Tradeweb reports the following data derived from trading activity on the Tradeweb Markets institutional European- and US-listed ETF platforms...
iShares writes that its assets under management have reached USD4 trillion. The firm says this comes off the back of..

Related Articles

Scott Kefer, VictoryEx Capital Holdings
Bailey McCann writes that active ETFs are capturing investor interest, according to the latest data from Morningstar, which finds that...
Chris Lo, Columbia Threadneedle
In a recent insight on India by Columbia Threadneedle Investments, the firm reports that the country’s economic reforms, which aim...
With an election on the horizon in the United States a group of ETFs is poised to capture investments on...
Robot worker
Qraft Technologies, based in South Korea, specialises in the use of AI in security selection and portfolio construction....
Subscribe to the ETF Express newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by