Asset owners and allocators in the EMEA region are increasingly turning to active strategies and private alternatives – private credit and real estate especially – in response to escalating geopolitical risks and persistent public market volatility, a new survey from PGIM finds.
The survey, which included 250 decision-makers managing approximately $10T in assets, found that 76% of respondents expect to increase their risk appetite over the next two years. This group includes a diverse range of institutional investors, such as pension funds, insurance companies, family offices, foundations, and sovereign wealth funds.
The research highlights a strong preference for private credit, real estate debt and equity, and sustainable equity as means to achieve portfolio objectives such as return generation and risk management. Nearly half of the respondents (49%) plan to maintain their current allocations to private credit, while 44% intend to increase exposure to the asset class, favoring sponsored lending opportunities. Notably, family offices and private banks are particularly inclined to boost their allocations to private credit over the next two years.
Despite challenges in the real estate market, a reset in valuations has led to optimism about this asset class. Value-add real estate strategies have emerged as a focal point for investors, indicating a willingness to take on risk but with a more cautious approach than opportunistic investments.
The survey also indicates that a majority of respondents (52%) believe their current asset managers have underperformed in providing access to liquidity via secondary markets. This sentiment underscores the need for fundraisers to enhance their offerings and transparency regarding liquidity solutions.
Furthermore, 62% of respondents expressed a preference for large, multi-line asset management firms that offer a broad array of investment products and have a local presence in multiple markets. This finding reflects the importance of comprehensive investment strategies and solid relationships in the current fundraising landscape.
Finally, respondents identified developed Asia Pacific and Emerging Europe as prime destinations for investment, while appetite for investments in China and Latin America is waning.
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