Key Takeaways
- • Northern Trust's second annual Asset Owners in Focus study, covering 181 senior leaders at pension funds, insurers, endowments, foundations, sovereign wealth funds, superannuation funds and multi-managers, found 94% now invest in private markets, up from 86% in 2025.
- • Average private market allocations rose to 17% of portfolios from 13% a year earlier, with private equity held by 86% of private-market investors, real estate by 82%, private credit by 78% and natural resources and energy by 69%.
- • Access is becoming the binding constraint: 31% of respondents cited difficulty gaining entry to desired funds and managers as a top investment challenge, up from 18% in 2025.
- • Sixty percent said liquidity had become more important over the past 12 months, with 60% citing the interest rate environment and 36% banking counterparty risk as drivers.
- • Data integration and data accuracy were each cited by 57% of respondents as top technology challenges, while 68% named harnessing AI as a top operational challenge, up from 56% in 2025.
Summary
Private market investing has become almost universal among institutional asset owners, according to a global study by US-based custody bank and asset manager Northern Trust. The firm's second annual Asset Owners in Focus peer study, based on responses from 181 senior leaders, found that 94% of respondents now invest in private markets, up from 86% in 2025, and that average allocations rose to 17% of portfolios from 13% last year. Mark Austin, pensions and insurance executive at Northern Trust Asset Servicing, told Funds Europe that exposure was now close to complete and that it was "very realistic to expect" all respondents to eventually hold private assets.
Private equity remained the most common exposure, held by 86% of private-market investors, followed by real estate at 82%, private credit at 78% and natural resources and energy at 69%. Demand is creating access problems, however, with 31% of respondents citing difficulty entering desired funds and managers as a top investment challenge. Austin said the trend was not uniform: some UK defined benefit schemes moving towards insurance buyout may become more cautious, because private assets can be difficult or impossible to transfer to insurers. Northern Trust continues to see strong interest from insurance, sovereign wealth and pension clients.
Liquidity has become a defining concern. Sixty percent of respondents said liquidity had grown in importance over the past 12 months, and the report describes a shift from return-seeking towards risk management, with 60% citing the interest rate environment, 56% changes in risk strategy and 36% banking counterparty risk. Austin linked the demand for cash to geopolitical uncertainty, saying asset owners held cash to retain flexibility to capture opportunities and meet commitments rather than to step aside from markets. Private allocations add to the strain through contingent commitments, future drawdowns, currency overlays that require cash for profit-and-loss movements, and capital calls from larger schemes investing directly in wind and solar farms.
Digital assets are entering the institutional mainstream cautiously. Forty-seven percent of respondents reported some digital asset exposure; among them, 46% held cryptocurrencies and 44% held digitally native ETFs. Among non-investors, 47% said the asset class did not meet risk tolerances, 44% cited volatility, and 42% pointed to regulatory uncertainty or compliance concerns. Austin said distributed ledger technology could also improve operating models, including in defined contribution schemes.
Data and technology are a central operational theme. Fifty-seven percent of respondents cited data integration and the same proportion cited data accuracy as top technology challenges. Austin said private markets make this harder because public market data is more standardised, easier to validate and simpler to analyse. Sixty-eight percent named "harnessing the power of AI" as a top operational challenge, up from 56% in 2025.
Private equity remained the most common exposure, held by 86% of private-market investors, followed by real estate at 82%, private credit at 78% and natural resources and energy at 69%. Demand is creating access problems, however, with 31% of respondents citing difficulty entering desired funds and managers as a top investment challenge. Austin said the trend was not uniform: some UK defined benefit schemes moving towards insurance buyout may become more cautious, because private assets can be difficult or impossible to transfer to insurers. Northern Trust continues to see strong interest from insurance, sovereign wealth and pension clients.
Liquidity has become a defining concern. Sixty percent of respondents said liquidity had grown in importance over the past 12 months, and the report describes a shift from return-seeking towards risk management, with 60% citing the interest rate environment, 56% changes in risk strategy and 36% banking counterparty risk. Austin linked the demand for cash to geopolitical uncertainty, saying asset owners held cash to retain flexibility to capture opportunities and meet commitments rather than to step aside from markets. Private allocations add to the strain through contingent commitments, future drawdowns, currency overlays that require cash for profit-and-loss movements, and capital calls from larger schemes investing directly in wind and solar farms.
Digital assets are entering the institutional mainstream cautiously. Forty-seven percent of respondents reported some digital asset exposure; among them, 46% held cryptocurrencies and 44% held digitally native ETFs. Among non-investors, 47% said the asset class did not meet risk tolerances, 44% cited volatility, and 42% pointed to regulatory uncertainty or compliance concerns. Austin said distributed ledger technology could also improve operating models, including in defined contribution schemes.
Data and technology are a central operational theme. Fifty-seven percent of respondents cited data integration and the same proportion cited data accuracy as top technology challenges. Austin said private markets make this harder because public market data is more standardised, easier to validate and simpler to analyse. Sixty-eight percent named "harnessing the power of AI" as a top operational challenge, up from 56% in 2025.
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