- Almost all LPs now expect net annual returns greater than 11% from PE over the next 3-5 years
- Two fifths of private equity investors will raise their target allocation to the asset class in the next year
- LPs are continuing to grow their exposure to PE funds focused on ‘real assets’
- Three in five PE investors believe GPs would benefit from having more gender-diverse teams
Increased investor exposure to alternative assets is being led by private equity, with two in five Limited Partners (LPs) planning an increased target allocation to the asset class in the next twelve months, according to Coller Capital’s latest Global Private Equity Barometer. However, although one third of investors say they will also increase their allocation to real estate, the same proportion will reduce their allocation to hedge funds. (Separately, almost two thirds of LPs say they expect large private equity investors to review their hedge fund exposure in the wake of CalPERS’ decision to stop investing in the asset class.)
Still-strengthening return expectations explain private equity’s popularity with investors. Almost all (93% of) LPs are now forecasting annual net returns greater than 11% from their private equity portfolios over a 3-5 year horizon (up from 81% of LPs two years ago). A quarter of LPs are forecasting net returns of over 16%.