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.

⦿ Key Developments

• 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.

⦿ Strategic Context

• 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.

⦿ Strategic Implications

• 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.

⦿ Risks & Constraints

• 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.

⦿ Watchlist / Forward Signals

• 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.