Some two-thirds (66%) of institutional investors plan to increase their private asset allocations over the next five years, according to Nuveen’s fifth annual EQuilibrium Global Institutional Investor Survey, which was released March 18.
Moreover, more than 90% of surveyed institutional investors now hold both private equity and private credit in their portfolios, double from the 45% who did so in 2021, underscoring the expanding role of private markets in institutional portfolios.
“Private market flows remain resilient, with funding sourced from public asset outflows, cash reserves, and new capital,” said Harriet Steel, global head of institutional at Nuveen, in the survey. “Even those adjusting allocations within private markets are largely reallocating rather than exiting.”
Private infrastructure, private credit and private equity continue to attract significant attention, with nearly one-half of surveyed investors planning to expand allocations to these areas over the next five years. Within these categories, investors indicated that private equity is where they plan to make the greatest increase, supported by a more optimistic outlook on growth.
Among alternative asset classes, private infrastructure and private real estate had the largest year-over-year jump in investors planning to increase allocations — to 50% and 37%, respectively, in 2025, from 35% and 24%, respectively, in 2024.
Furthermore, investors are being selective in targeting specific high-growth areas within both markets, such as data centers and private infrastructure debt. Indeed, data centers have emerged as a leading priority, with 65% of investors planning to increase allocations to real estate focused on digital infrastructure, reflecting the rapid expansion of cloud computing and artificial intelligence-driven demand.
Also, more than 30% of investors who are planning to increase private fixed-income assets are looking at energy infrastructure credit.
“Aligned with what we’re hearing from clients on a day-to-day basis, three main themes emerged from the survey this year,” Steel said. “First, investors are considering ways to play the next real estate cycle; second, private markets will play an expanded role in portfolio construction with nearly 40% of investors seeking out a broader selection of asset managers to help grow these allocations; and third, among the insurance cohort, a client segment with a unique set of challenges and objectives, respondents indicated both a greater appetite for complexity and specialization within private markets compared to last year and a greater focus on impact investing compared to other investors.”
Steel added that as institutions “sharpen their focus on specialized real asset opportunities, the trend toward private market solutions continues to accelerate, reinforcing the role of real estate and infrastructure as core components of institutional portfolios.”
Long-term growth opportunities are back in focus as confidence rises, Steel noted. “As a result, investors are reassessing the attractive return potential and effective inflation hedges of real estate and infrastructure, amid lingering concerns over deficits, trade policy and structural inflation risks,” she said.
Institutions are also grappling with the dual mandates of addressing climate risk and capturing attractive return opportunities, the survey found. As such, investors are adopting a more “balanced and pragmatic” view of the energy transition, with 73% of respondents agreeing that near-term energy needs cannot be met without incorporating both traditional and renewable energy sources. “We are seeing a shift toward strategies that combine the practicalities of current energy needs with the ambitions of a sustainable future,” Steel said.
While fewer investors now view the low-carbon transition as inevitable, 61% compared with 79% in 2022, the commitment to clean energy remains strong, with most institutions prioritizing clean energy and carbon reduction either as part of net-zero goals or to capture compelling risk-return opportunities, the survey added.
Overall, 44% of institutions have net-zero commitments, while another 25% plan to do so in the coming 12 months. Even among the roughly 30% who do not intend to set net-zero commitments, the majority of them (64%) said they are still investing in clean-energy strategies or reducing carbon in their portfolios.
Nuveen had $1.3 trillion in assets under management as of Dec. 31.
The survey, which was conducted in October and November, covered 800 institutions around the world, comprising decision-makers at corporate pension funds, public/governmental pension funds, insurance companies, endowments and foundations, superannuation funds, sovereign wealth funds, and central banks, representing $19 trillion in assets.
