Private markets allocations are diverging across strategies, with secondaries emerging as a key area of growth while buyout sentiment weakens, according to research from fund administrator Gen II.
The Core Alternative Managers’ Mood Index (Cammi) tracks allocation sentiment across private equity, real assets and private credit, with scores above 50 indicating growth and below 50 decline. The latest Cammi results, based on UK and European fund managers, showed capital becoming more selective, with secondaries and fund-of-funds strategies among the most favoured categories.
Almost half of managers expect allocations to secondaries and fund-of-funds strategies to increase over the next 12 months, showing strong demand for liquidity solutions as exit timelines remain uneven.
The shift is also reflected in the growing use of liquidity tools, with 53% of managers already using or planning continuation vehicles. Fundraising conditions are also becoming challenging, with longer cycles and capital concentrating in fewer strategies, the survey found.
By contrast, 27% of managers expect buyout allocations to increase, while 36% anticipate a decline, highlighting the impact of higher financing costs, valuation gaps and slower exit activity on traditional private equity dealmaking.
Growth capital remains one of the most attractive areas for allocation, with 46% of managers expecting increased allocations, while 40% expect allocations to venture capital to rise.
Real assets, including real estate and infrastructure, remain a stabilising component of portfolios, with 38% of managers expecting allocations to increase. Private debt, which has been a strong performer in recent years, continues to attract capital, though at a more moderate pace, with 37% expecting an increase.
Private capital allocations to rise in 2025: Cammi report
Technology emerged as the top internal challenge for managers, ahead of talent, operational efficiency and data management.
Cybersecurity was chosen as the leading due diligence focus category, cited by 60% of respondents, followed by cash management, ESG, outsourcing governance and domicile choice.
Externally, political uncertainty was the biggest concern for respondents (34%), followed by recession risk, fundraising and regulatory challenges, as well as competition and consolidation.
The overall Cammi score stood at 54.56, suggesting that managers still expect allocations to rise over the coming year, although allocations are becoming more selective.
The report also flagged four top priorities for managers: upgrading operating models to meet growing tech and reporting demands, stress-testing fundraising plans, strengthening liquidity frameworks as secondaries activity rises, and improving investor reporting around areas like cybersecurity and cash controls.
Michael Johnson, chief commercial officer at Gen II, said: “Secondaries have come roaring into first place… the pullback in buyout sentiment tells you managers are thinking harder about pricing, leverage and exit routes.”
