European fund selectors are increasingly turning to private market assets to enhance diversification and capture return potential, according to the European fund selector study conducted by Research in Finance and asset manager Neuberger Berman.
The study has shown a rise in appetite for private markets since 2024, with private equity remaining the most favoured asset class. However, private debt has seen the strongest growth in intended allocations and European Long-Term Investment Funds (Eltif) are rapidly gaining recognition, now outpacing UCI Part II funds in both familiarity and adoption.
Among the 894 fund selectors surveyed across Pan-European and UK markets — comprising 597 retail and 297 institutional respondents — portfolio diversification (74%) and high return potential (60%) were the most commonly cited benefits of private market exposure. Other advantages mentioned included a long-term investment horizon (45%), capital growth (33%), and low volatility (33%).
A lack of liquidity (57%) emerged as the top barrier to investing in private assets, followed by lack of transparency (41%) and high minimum investment requirements (36%).Interest in private debt has seen a significant year-on-year increase, with the proportion of selectors planning to raise allocations jumping from 19% to 47%. While average allocations are relatively consistent across regions, Spain (67%) and France (65%) stand out for their higher adoption of private debt within portfolios. Private equity remains the dominant private market allocation across both institutional and retail channels.
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The highest average allocations were recorded in the Nordics (9.4%), Germany (9%) and Switzerland (8.2%). In contrast, the UK lags with an average allocation of 4.4%, reflecting its market’s traditional preference for listed investment trusts. Despite this, private equity is expected to see continued growth in allocations, particularly among pan-European retail investors.
Approximately 70% of Pan-European selectors now report familiarity with Eltifs, up from around 50% in 2024. Italy leads the way, with 85% of fund selectors familiar with the structure and 24% indicating they are likely to recommend Eltifs to clients. Overall, 37% of selectors surveyed either already allocate or plan to allocate to Eltifs over the next twelve months — more than triple the 11% planning to use UCI Part II funds.
José Cosio, head of intermediary – global ex US at Neuberger Berman, commented: “In the current volatile macroeconomic environment, the resilience and diversification that private markets can provide are more valuable to clients than ever. This study shows that in Europe so called ‘alternatives’ are now mainstream and have become an indispensable tool in the portfolio of fund selectors seeking to meet their investment objectives. We are encouraged by the continued momentum behind ELTIFs as an efficient access point for clients to these strategies and look forward to helping clients navigate the new options available to them.”
In selected regions, Neuberger Berman has launched the NB Private Markets Academy, an on-demand platform providing education and insights to help advisers and investors better understand private markets.
