The global private wealth market for private market strategies is set to reach between $10 and $13 trillion by 2032, according to research and consulting firm Novantigo.
The report, ‘Private Assets in Private Wealth Portfolios: The Secret to Growth’, detailed developments and opportunities for asset managers, mapping the entire universe of Eltifs and evergreen funds in Europe.
Currently, a significant portion of asset managers derive only a small fraction of their private markets’ capital from the private wealth channel. Nearly half of those surveyed shared that they manage less than 15% of their assets from this source. Despite this, the push to grant individual investors access to private markets emerged as a priority, with 78% of managers setting ambitious goals to manage at least 15% of private market assets from private wealth channels in the next three to five years.
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Catering to private wealth with private market strategies requires a specialised approach, necessitating dedicated teams. At present, only 53% of asset managers have private wealth teams, but this is expected to change. About 44% of global traditional asset managers and 50% of global private markets managers said they plan to expand their private wealth sales teams in Europe within the next year, signifying increasing competition in the sector. However, fewer boutique managers intend to expand in Europe, focusing instead on domestic markets and institutional investors.
“The growing momentum and competition in this sector emphasize the urgency for those planning to tap into this market to swiftly define their engagement strategies,” said André Schnurrenberger, co-founder and managing partner at Novantigo. He pointed out that while the market opportunity is substantial, distribution channels are limited and dominated by a few large global private banks, presenting an advantage for early movers.
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Leading private banks, particularly in Switzerland, have nearly completed their selection of evergreen funds, making it crucial for new entrants to act swiftly. According to the research, those who have already entered the market are rapidly advancing, recognising the significant opportunity private wealth presents.
“While some private banks and wealth managers have a long history with evergreen funds, others are still determining their approach,” said Justina Deveikyte, co-founder and managing partner at Novantigo. She noted that 62% of surveyed private banks do not offer UCI Part II funds, with only 3% offering more than four such funds. However, 60% of those already offering UCI Part II funds plan to expand their offering and 28% of those who do not are considering introducing them within the next year.
The European market is witnessing a surge in new players offering evergreen funds to the private wealth channel, a trend the researchers expect to continue. In 2024, 23% of asset managers plan to launch new evergreen funds, primarily from leading global private markets firms and traditional asset managers with private markets capabilities.
Most of these evergreen funds are relatively new, with nearly half launched recently and raising less than €200 million each. Among the 48 evergreen funds tracked by Novantigo, only eight exceed €1 billion, but these account for 92% of the total assets of evergreen funds in Europe.
