Institutional investors in the Benelux region plan to allocate more capital to private markets this year.
This is according to an annual survey conducted by the U.S. asset manager Nuveen, which polled forty institutional investors managing at least 500 million dollar in assets.
Investors anticipate market volatility this year due to heightened geopolitical risks, while central banks’ monetary policies add to the uncertainty. Approximately 23 percent of respondents expect the global economy to enter a recession. Among the surveyed investors, insurers appear less concerned about economic growth and recession risks compared to last year’s survey.
Between 13 and 20 percent of respondents see these developments as sufficient reason to make significant changes to their portfolios. Nuveen noted that while this percentage is lower than two years ago, it still indicates movement in global capital flows.
Professional investors are seizing uncertainty as an opportunity to capitalize on market dynamics, particularly in private markets, according to the study. “Capital that is currently sitting on the sidelines will increasingly flow into higher-risk investments this year,” Nuveen stated.
Infrastructure and private equity remain attractive
Interest in private markets has grown significantly in recent years, and Nuveen expects this trend to continue over the next five years. Around 70 percent of respondents intend to increase their exposure to private markets during this period. Infrastructure and private credit remain particularly appealing, followed by real estate and private equity to a slightly lesser extent. Additionally, approximately 23 percent of respondents are looking at niche markets, including debt financing.
“All in all, Benelux investors believe that expanding into private markets and alternative investments can enhance their investment expertise and decision-making,” Nuveen concluded.
Investor expectations in Luxembourg, the Netherlands and Belgium broadly align with those of investors outside the region. Nuveen’s Benelux study is part of a larger global survey of 800 institutional investors. The broader findings reveal that around 66 percent of respondents plan to increase their exposure to private markets over the next five years. More than 90 percent already have positions in private investments, a significant increase from 2021, when only 45 percent did.
Three key investment themes
According to the U.S. asset manager, three themes stand out for this year. “First, investors are exploring opportunities to position themselves in the new real estate cycle,” said Harriet Steel, head of Institutional at Nuveen. “Long-term opportunities are back on the agenda, with investors looking to real estate and infrastructure for returns and inflation hedging, given current concerns over government deficits, trade policies, and structural inflation risks.”
Second, private equity is expected to play a larger role in investor portfolios, with 40 percent of respondents selecting a broader range of asset managers to support their allocations.
Finally, according to Nuveen’s expert, insurers in particular are increasingly seeking more complex and emerging themes within private markets, with a stronger emphasis on impact investing.