Institutional investors are more eager than ever to increase private market exposure, but a wall of liquidity concerns is keeping many from moving as fast as they’d like, according to Morningstar’s fifth annual Asset Owner Perspectives Survey.
Key Takeaways:
- Europe’s private market target of 25% of assets leads all regions, ahead of APAC and North America.
- Barriers to private market investing hit North America hardest, with 70% of asset owners citing liquidity risk there.
- Private equity, infrastructure and private credit are drawing the most new capital, while real estate faces a pullback.
Morningstar Indexes and Morningstar Sustainalytics polled 504 asset owners across North America, Europe and Asia-Pacific in July 2026. The survey found that 63% of respondents cited liquidity as the top barrier to expanding private market allocations.
The average target allocation, meanwhile, is climbing from 19% of assets today to 23% within five years. That gap between appetite and access is exactly the opening publicly traded private credit and private equity ETFs fill.
Respondents included pension funds, insurers, family offices, endowments and sovereign wealth funds, according to the survey. More than half, 57%, managed at least $1 billion in assets, while 26% managed $10 billion or more. That scale gives the results weight across some of the largest pools of institutional capital.
The Push Toward Private Markets
Average private market allocations will rise from 19% of assets to 23% within five years, the survey found. Europe reported the most ambitious targets, expecting private markets to reach 25% of assets, up from 20% currently. North America’s target sits at 21%, up from 18%, while APAC climbs to 23% from 19%.
Diversification from public markets was the top reason for adding exposure, according to 56% of those planning to increase allocations. Higher expected returns ranked second, at 42%. Smaller shares pointed to structural themes such as electrification and data transmission, at 29%. Others cited the steadier cash flows tied to infrastructure and other real assets, at 26%.
See more: Private Market ETFs: Democratizing Access
Those motivations shift by region. APAC respondents leaned harder on diversification, at 60%, and cash flow resilience, at 31%. European investors, though, were more likely to cite higher expected returns, at 46%, and supportive government policy, at 19%.
Hong Kong (81%), Singapore (70%), China (67%) and Canada (66%) cited diversification well above the 56% average, per the survey. China stood out for a different reason: an emphasis on thematic opportunities, at 40%, and impact investing, at 33%, with higher returns cited by just 13%.
New capital is also flowing unevenly across the private market landscape. Asset owners directed new allocations primarily toward private equity, the choice of 43% of respondents. Infrastructure followed at 35% and private credit or direct lending at 32%.
Liquidity Tops the List of Barriers
Liquidity was the dominant obstacle to increasing private market allocations, according to 63% of asset owners globally. That figure rose to 70% in North America and 65% in APAC.
Transparency issues ranked second, at 43%, followed by limited data availability, at 28%. Concerns about the effect on returns ranked next, at 27%, followed by regulation, at 25%.
Regional emphasis varied within that list. North American respondents were the most focused on liquidity risk. APAC investors, by contrast, were more likely to point to limited data, at 33%, and return concerns, at 32%. European asset owners cited regulatory barriers more often, at 31%, versus 27% in North America and 17% in APAC.
Where Advisors Can Step In
For financial advisors, the survey’s findings describe a structural opening. Institutions with dedicated staff and years of private market experience still rank liquidity and transparency as their two biggest obstacles, even while raising their target allocations. Clients who want that same diversification, without a decade-long lockup, are already the audience advisors serve.
Private equity, infrastructure and private credit are the three areas where asset owners are directing the most new capital. All three already have publicly traded, listed structures that trade like ordinary stocks. An investor in one of those listed vehicles can exit a position within a trading session, something a pension fund locked into a private equity vehicle cannot do.
Transparency works the same way in an advisor’s favor. Publicly traded fund structures disclose holdings on a regular, standardized schedule, addressing the transparency concerns 43% of asset owners cited as a barrier. Liquidity and disclosure, the two obstacles asset owners raised most often, are exactly what a listed structure provides.
Real estate was the exception to institutions’ broader embrace of private markets, the survey found. It was the only segment where more asset owners cut exposure than added it over the past year, 24% versus 16%. The sharpest pullback came in Europe, where 26% of respondents cut real estate positions.
Originally published on Advisor Perspectives
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