Asset Owners Continue Shift Toward Private Markets

⦿ Executive Snapshot

What: Northern Trust's study reveals a significant shift among asset owners toward private markets and digital assets amid increasing liquidity demands.
Who: Northern Trust, over 180 asset owners, including pension funds and endowments across multiple regions.
Why it matters: The findings highlight how asset owners are adapting their strategies to enhance portfolio resilience and operational efficiency in a rapidly changing investment landscape.

94% of respondents report investing in private markets, an increase from 86% in 2025, with private market allocations rising to 17% of the average portfolio.
60% of asset owners state that liquidity has become more important over the past year, linking it to portfolio resilience and risk management.
47% of respondents report current digital asset exposure, with adoption influenced by regulatory clarity and governance requirements.
Nearly 70% cite 'harnessing the power of AI' as a top operational challenge, while 57% point to data integration and accuracy issues.
Asset owners are adopting targeted hybrid operating models, balancing internal control with external expertise to manage complex portfolios.

The shift toward private markets reflects a broader trend among institutional investors seeking diversification and enhanced returns in a low-yield environment.
The increased focus on digital assets signifies a growing acceptance of cryptocurrencies and blockchain technologies as legitimate investment vehicles within traditional portfolios.

Immediate implications include heightened competition for private market investments, as asset owners seek to capitalize on perceived opportunities.
Long-term, the focus on data and AI investments may drive operational improvements and innovation in asset management, enhancing decision-making capabilities.

Potential risks include regulatory uncertainties surrounding digital assets, which may hinder adoption and integration into investment strategies.
Data quality and availability issues could constrain the effective use of AI and analytics, limiting operational efficiency and decision-making.

Upcoming regulatory developments regarding digital assets will be crucial in determining the pace of adoption among asset owners.
The effectiveness of hybrid operating models will be assessed as asset owners navigate increasing complexity in their portfolios and operational frameworks.