An overwhelming 90% of institutional limited partners in private markets think this asset class will continue to outperform the public markets in 2024, according to the fourth annual Global Investor Survey from Adams Street Partners, released March 5.
Moreover, about two-thirds of survey respondents expect to increase their private market deployments in 2024.
Respondents also asserted that private markets managers with scale and a platform that crosses multiple strategies are in the best position to take advantage of investment opportunities in technology, healthcare and other sectors benefiting from change, dislocation and growth, the survey found.
Some 39% of respondents believe rising interest rates and inflation pose the biggest challenges to private markets this year. However, that figure falls well below the 55% mark from the previous year's survey. Moreover, in the latest survey, 46% strongly agree that rates have peaked and that rates will be lower by the end of 2024 compared with the end of 2023.
"Interest rates appear to have peaked and stabilized and may modestly decline this year, which should result in a pickup in deal activity and liquidity," said Jeff Diehl, managing partner and head of investments at Adams Street, in a news release issued in conjunction with the survey. "Our experience over more than 50 years tells us that great companies can succeed in any interest-rate environment, so our focus is on getting investment exposure to some of the best private companies."
In addition, more than half (55%) of respondents worry that the polarized political climate in the U.S. poses the biggest geopolitical threat to global economic stability and growth.
Moreover, some 40 countries will hold elections this year, thereby increasing the potential for policy disruptions. Respondents also cited geopolitical issues such as the Israel-Hamas war and U.S.-China tensions as major threats to markets.
In addition, the survey found that 21% of respondents think North America offers the best investment potential in 2024, a decline from 26% in the year-earlier survey. Moreover, 19% said the best investment opportunities will be found in China, down from 22% last year.
About 13% of respondents think the emerging Asia-Pacific region will be the best for investments, up from 9% last year, while 20% look to Europe as the best place to invest, up from 18% in the prior year.
The survey was conducted among 100 limited partners globally in the final six weeks of 2023.
Adams Street Partners is a Chicago-based private markets investment firm with more than $58 billion in assets under management.
