A growing consensus among institutional investors and wealth advisors signals a significant shift toward alternative investments. According to a recent Brown Brothers Harriman (BBH) survey of 500 respondents across the U.S., U.K., Germany, Switzerland, and Japan, more than 90% of participants plan to expand their exposure to private markets over the next two years.
The survey highlights a near-universal belief among professional investors that they are underexposed to alternatives and need to catch up.
The study, conducted in late March and early April, coincided with heightened market volatility following global tariff announcements. Ninety-four percent of respondents acknowledged feeling underinvested in private assets, while 91% expressed intentions to increase allocations to alternatives within two years. BBH’s Chris Adams, global head of alternative funds business development, emphasizes the urgency: “Although private asset strategies have seen exponential growth over the past decade, it’s clear many investors still believe they’re underinvested.”
Advisors and Broadening Access to Alternatives
Amid this growing demand, advisors are actively seeking ways to integrate private market investments into client portfolios, particularly for non-accredited investors. Industry speculation suggests that regulatory bodies like the SEC or Congress may soon expand access to alternative investments, aligning with priorities across asset management.
The survey identifies diverse motivations for increased exposure to alternatives. Twenty-eight percent of respondents believe private markets outperform public markets, offering the potential for higher returns. The same percentage see private markets as a hedge against inflation. Other reasons include diversification benefits (23%), perceived lower volatility compared to public markets, and tax efficiency advantages (21%).
Addressing Barriers to Entry
Despite enthusiasm for alternatives, barriers remain. Among investors and advisors who have yet to incorporate alternatives, 63% cited limited product availability, while 57% pointed to a lack of knowledge about these investments. New fund structures, such as alternative ETFs and funds of funds, could address these challenges by enhancing access and understanding.
Liquidity emerged as a surprising priority among survey respondents, with 43% placing liquidity above target performance. By comparison, 38% were more focused on achieving performance targets than ensuring liquidity. This represents a notable shift in perception, as private markets have traditionally been viewed as prioritizing performance over liquidity. BBH’s report underscores this change: “Private markets have always been regarded as an investment strategy that prioritizes performance, with liquidity very much taking a back seat. But priorities seem to be shifting across both institutional and wealth investors.”
High-Net-Worth Investors’ Growing Interest in Private Assets
A parallel survey from BNY Wealth underscores similar trends among high-net-worth families. Wealthy investors, with assets exceeding $250 million, are significantly allocating to private equity, with 28% of their portfolios in private companies compared to just 15% in public stocks. This appetite for private assets reinforces the broader momentum among professional investors toward alternative strategies.
As demand for alternatives rises, the industry faces a clear mandate: develop innovative solutions to meet the evolving needs of institutional and individual investors. Whether driven by performance, diversification, or inflation protection, the race to close the alternatives gap is well underway.
