The UK government has strongly endorsed the case for increasing investment in private assets, most recently through its Mansion House Accord, in which 17 pension funds committed to allocating up to 10% of their portfolios to these asset classes. Emmanuel Deblanc, Chief Investment Officer of M&G’s private markets division, highlights several characteristics that make private markets particularly attractive to both wholesale and private wealth investors.
He points out that 87% of companies with annual revenues exceeding $100 million remain privately held, offering an alternative source of returns alongside stable income streams, diversification benefits, and exposure to long-term growth themes. Research from Bain in 2023 noted that private investors had allocated only around 5% of their assets to private markets—an allocation that is now rising, especially across the UK and Europe.
This shift has been facilitated by the introduction of the UK’s Long-Term Asset Fund (LTAF) and the EU’s European Long-Term Investment Fund (ELTIF), both designed to broaden access to private equity, credit, infrastructure, and real estate. “These vehicles deliver greater accessibility, transparent pricing, and the ability to trade private market investments more seamlessly,” Deblanc explains. He adds that regulatory enhancements following the Alternative Investment Fund Managers Directive have imposed rigorous diversification and currency-exposure requirements.
Rachel Wheeler, Global Product Head of Regulated Fund Solutions at Waystone, agrees that the launch of LTAFs and ELTIFs has opened up private markets to a much wider pool of investors, setting the stage for private assets to play an increasingly prominent role in diversified portfolios.
