State Street Survey Finds Private Markets to Experience Significant Momentum in the Next Three to Five Years
Survey findings forecast allocation to private markets will increase for the near-term, but asset owners require improved data standards and reporting
According to the survey results, asset managers expect that their median allocation to private market assets will rise from
However, there are significant barriers to investing in private markets.
Access to data
The survey found that data quality and standardization is a key barrier to increasing private markets allocations. Sixty-eight of asset owners noted a significant opportunity cost to working with private markets data and want a higher quality data provisioning service. Fifty-eight percent also say data management and data quality validation is now part of the due diligence process for manager selection.
Asset owners require greater use of technology to improve the quality and timeliness of information from asset managers, and they increasingly want an accurate, top-down view of their portfolio across all asset classes. To meet this demand and remain competitive, managers will need to invest in a variety of data tools and technologies.
“Having a single, unified data management platform to manage data across the front, middle and back offices, is no longer a ‘nice to have,” said
ESG Remains a Priority
Survey findings also demonstrated that asset owners are seeking private assets that make a “positive, measurable contribution to sustainability or other ESG criteria,” with
Results showed a significant regional variation regarding views on ESG themes. The survey found that only
Overall, respondents reported that the lack of ESG data standards are hindering progress. To address difficulties in comparing potential investments and assess their sustainability credentials, nearly half (
Future of Private Markets Investments
The survey found that integration is a crucial element as managers address the data and operations concerns around private markets. Investors require providers that have sophisticated technology to enable accurate reporting of performance, valuations and ESG-related data. Asset managers are willing to explore new data tools but are hampered by costs and concerns that wholesale changes will disrupt day-to-day client services.
“It’s interesting to see that respondents remain largely optimistic about the future of private markets investments, and private market managers expect to see greater diversity of investors turning to the asset class in the near future; however investors in both public and private markets are realizing the risk and inefficiencies created across their bespoke front, middle, and back office solutions” said
To read the full survey results, please click here.
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