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AUM in Action

Sustainability, Infrastructure in Private Markets Draws Asset Owners

A survey of over 60 large asset owners with a collective US$2 trillion in assets has indicated that there is appetite to increase capital allocations to private markets over the next 12 months. The inaugural ‘2024 Large Asset Owner Barometer’, published by investment consultancy firm Mercer, noted that over half of assessed asset owners plan to diversify their portfolios via investments in infrastructure and sustainability-focused strategies, at the expense of real estate and developed market equities. This is despite concerns in some countries around ESG investing and overvaluation of certain private market asset classes, Mercer said, adding that respondents continue to invest for the long term and feel confident their portfolios are well positioned to withstand shocks over the coming year. Nonetheless, asset owners did express concern around navigating private markets, citing complexity and illiquidity. Further, only 18% of respondents manage private market investments in-house. Rich Nuzum, Mercer’s Executive Director of Investments and Global Chief Investment Strategist, said: “Large asset owners have a clear understanding of what they do well in-house and where they benefit from external expertise. Nearly half (41%) of large asset owners surveyed say they prefer to outsource investment management entirely.” Fifty-five percent of the surveyed asset owners, each with global assets under management of more than US$5 billion, have set climate transition targets, while only 29% have implemented them, Mercer said.

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