Advisers set to increase exposure in private markets

A global survey by Hamilton Lane found that six in 10 (59 per cent) advisers plan on allocating at least 10 per cent to private market investments in 2025, of which 30 per cent plan to allocate 20 per cent or more to the asset class.

Private infrastructure, in particular, has increased in favour with around half (48 per cent) of respondents intending to increase exposure in that sector.

As to why there is increased interest from investors, the firm explained that the benefits of private infrastructure, including high barriers to entry, durable cash flows, competitive total returns, income yield and portfolio diversification, have become more widely understood.

Furthermore, three-quarters (76 per cent) of survey respondents said their clients have noted higher rewards from private assets compared with stocks and bonds, which, according to Hamilton Lane, is due to superior performance and diversification.

Notably, the survey found that 70 per cent of advisers reported that helping clients to invest in private markets deepens their relationship, giving advisers a competitive advantage over others when attracting and retaining clients.

The findings also noted a correlation between increased client interest in private markets and a higher level of adviser knowledge regarding the asset class.

To this point, Hamilton Lane’s private wealth survey found that 63 per cent of advisers rated their knowledge of private market assets as “advanced”’, up from 55 per cent last year. Meanwhile, the firm said there is still a knowledge gap for the remainder of the respondents.

Hamilton Lane’s head of private wealth in Australia, Scott Thomas, noted the shift in client demands as they seek long-term, reliable investments.

“The strong interest in private markets among our Australian private wealth clients is directly aligned with the report’s findings, which underscore a global shift towards this asset class for diversification and long-term performance enhancement,” Thomas said.

“Australia has witnessed a significant shift in private market investment, with high-net-worth individuals increasingly embracing evergreen structures.

“These innovative funds, accessible via PDS and on wrap platforms, offer a perpetual investment horizon that aligns with long-term goals and provides efficient access to this traditionally exclusive asset class.”

The firm’s head of private wealth solutions, Steve Brennan, noted the growing appreciation of investors for the diversification and performance benefits on offer from the private markets.

“Just a few years ago, we would never have expected to see nearly 60 per cent of advisers planning to allocate 10 per cent or more of clients’ portfolios to this asset class in the coming year. To us, this reinforces the growing understanding of the wealth creation opportunities within the private markets,” Brennan said.

“As we look ahead, we expect interest in the infrastructure space to continue to grow, and hope to see investors who describe their knowledge of the private markets as ‘advanced’ tick up even further.

“At Hamilton Lane, we continue to be focused on bringing high-quality private markets investment opportunities to advisers and their clients while expanding investor access and knowledge of this asset class.”