Institutional Investors Step Up Commitment to Private Markets, Aviva Study Finds

Institutional investors are allocating to private markets at unprecedented levels, according to newly released research that points to a sustained shift in global portfolio construction. The latest annual Private Markets Study from UK-based Aviva Investors shows that private markets now account for 12.5% of total portfolios worldwide.

The research also indicates that momentum is far from slowing. Nearly half of respondents (49%) said they expect to raise their exposure to private markets over the next two years, while a strong majority—76%—believe private market investments will outperform public markets over the coming five years. Among defined contribution pension schemes, capital growth emerged as the primary motivation behind higher allocations, with 55% planning to increase exposure and expand member access to private market investments.

For public pension funds and insurers, the study highlights a clear preference for co-investment as the favored method of accessing private markets. This approach was identified by 64% of public pension funds and 62% of insurers, reflecting a growing desire for more direct participation alongside managers.

The findings also reveal a notable year-on-year rise in demand for both pooled funds and co-investment structures. This year, 58% of respondents said they favor single-asset class pooled funds, up sharply from 40% last year. Similarly, 54% identified co-investment as their preferred route to market, compared with just 35% in 2024.

Commenting on the results, David Hedalen, head of private markets strategy and research at Aviva Investors, described the growing enthusiasm for co-investment as a “significant finding”. “Not only does it suggest demand for better access to larger opportunities, but it could also highlight the desire to have greater control of portfolios at an asset-specific level and capturing opportunities that allow an increasingly tailored approach to risk and return metrics, liability profiles, as well as other non-financial outcomes, such as regional preferences,” said Hedalen.

The study is based on a survey of 500 institutional investors across Europe, North America, and Asia, underscoring the global nature of the trend toward greater private market exposure.

By fLEXI tEAM