Investors lose faith in private markets
Opinions regarding investments in private markets, including private equity and credit, have changed, as revealed by VanEck’s 2026 smart beta survey, which found that roughly one-third of financial advisors are unsure about the three-year outlook.
VanEck received 938 answers from industry professionals for the study, which examined exposure levels. Data shows that allocation to private assets has dropped, with about 50 per cent of participants currently invested, a decrease from the 60 per cent recorded in 2025.
Active allocations to private market assets have also declined by 15 per cent from 2025, and opportunistic allocations have fallen by 17 per cent, signalling a strong sentiment shift in the market. The survey also indicates that fewer advisors are considering adding these assets, with only 14 per cent planning an allocation, down from 18 per cent in 2025.
Conversely, 35 per cent of respondents stated they have no intention of putting client money into private assets, a rise from 22 per cent the previous year. The primary worries cited were liquidity issues at 39 per cent, followed by high costs or a lack of transparency at 18 per cent. About 10 per cent cited an unpredictable regulatory climate as a worry.
Almost 40 per cent of those surveyed have zero exposure to private market investments, while a third hold between 5 and 10 per cent, and about 2 per cent have stakes exceeding 20 per cent. When choosing how to gain exposure, single private market funds were preferred by advisors, followed by listed vehicles and fund-of-funds structures.
Arian Neiron, VanEck’s Asia Pacific chief executive and managing director, commented that the immediate appeal of private markets is fading. He noted that advisors are moving toward fixed and floating-rate income options that provide high nominal yields along with better liquidity, valuation, and transparency. Neiron added that private assets are currently having a harder time attracting investor capital than they did a year ago.
Neiron pointed out that bond yields are sitting at around 5 to 7 per cent return for fixed income products such as subordinated debt and floating-rate strategies. He stated that investors are now asking if the risk premium on offer is adequately compensating for the additional risk that comes from investing in private credit. According to VanEck, the premium on offer is becoming harder to justify with so many headwinds and this is strengthening the case for advisers and investors to move their allocations away from private credit and into public markets, particularly income-oriented exposures.
