According to a survey by RBC BlueBay Asset Management across 800 fund buyers, wealth managers and consultants, investors do not expect to increase their current 22% allocation to private markets over the next three to five years.
This is despite just over half of respondents said they expect public markets to outperform private markets over the next five to ten years.
European fund selectors shift towards private markets
According to 46% of respondents, market volatility has not affected the investment case for public equities and fixed income.
The respondents' top three objectives for asset allocation over the following three years further support the argument for public markets, the survey suggests.
Equities and fixed income remain the top allocation choices for 31% and 26% of respondents, respectively, and the majority of those surveyed (77%) favoured an active approach over a passive one.
Half of respondents foresee a drag on returns due to inflation for at least the next three years, with US wholesale investors the most gloomy of all regions.
Most international wholesale investors (39%) expect portfolio returns to hover around 5-6% over the next three to five years.
Head to Head: The future of private markets
Anthony Pickering, head of business development at RBC BlueBay Asset Management, said: "Against a backdrop of heightened volatility, our research suggests that a majority of wholesale investors continue to favour active management, seeking greater flexibility in portfolios as they navigate these uncertain times."
"The research also suggests the much-anticipated boom in private markets allocations may well play out more slowly than expected, as investors first seek to address portfolio imbalances caused by market re-pricings through allocations towards public markets."