Our new Atlas 2024 report shines a light on the outlook of private markets. It is based on research with 201 global private fund managers and European asset allocators. Its findings range from challenges in capital raising for private market fund managers to ways in which wealth managers and DC pension schemes will invest in these markets. 

In the Pinpoint of view series, Carne experts take a deeper dive into some of the key themes cited in the report and how they see this unfolding. 

Distributing private markets funds to new client segments – challenge or opportunity?

The scale and complexity of private markets can bring challenges of their own. From a distribution perspective, some of the fastest growing asset pools have no or limited allocations to private markets – but this will change. Europe, for example, is currently a $43 trillion wealth management market[i]. And it is getting bigger. 

According to our new research, a significant proportion of these client assets will increasingly be allocated to private markets: private equity, private debt, infrastructure, venture capital and real estate. 

European wealth managers anticipate private market investments to account for around 11% of their sector’s AUM by 2030, up from 5% in 2021.  Other ‘new’ investors will also allocate to such assets. UK DC schemes expect their sector’s level of investment to increase by on average 10% over the next three years. European and US fund management groups are already preparing for the opportunity. 

Yet, from a distribution perspective, Europe is a highly fragmented market. It has many regional regulatory interpretations, several European-wide regulations (AIFMD, UCITS Directive, CBDF, MiFID) and Switzerland and the UK are not even in the EEA and operate under different regulations and frameworks. 

What’s more, investor preferences, whether for products or distribution channels, vary from jurisdiction to jurisdiction. It can also be a costly market to enter. It is especially so for US managers. They can no longer enter Europe through FCA-regulated UK subsidiaries, due to Brexit.  

Third-party specialists can deliver pre-marketing, domiciling and distribution network support – enabling investment managers to launch and scale their funds in Europe with greater speed and confidence. It can also be more cost-effective than setting up a new regulated entity. For example, 60% of US managers surveyed have already taken this external AIFM route. 

As the market for illiquid assets grows and matures, it is reasonable to expect outsourcing to play a critical role in facilitating effective distribution and speed to market. This means investment managers can capitalise on the significant private market opportunity present across the continent. 

To learn more about the ways private markets are growing and revolutionising the industry, check out the full Carne Atlas 2024 report.

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