Private market investing has become almost universal among institutional asset owners, but rising allocations are increasing pressure on liquidity management, operating models and data infrastructure, according to a global study by US-based custody bank and asset manager Northern Trust.
The firm’s second annual Asset Owners in Focus peer study, based on responses from 181 senior leaders at pension funds, insurers, endowments, foundations, sovereign wealth funds, superannuation funds and multi-managers, found that 94% now invest in private markets, up from 86% in 2025. Average private market allocations rose to 17% of portfolios, from 13% last year.
Mark Austin, pensions and insurance executive at Northern Trust Asset Servicing, told Funds Europe that private markets exposure among asset owners was now close to complete. Asked whether private market allocations could soon reach all respondents, he said: “It’s very realistic to expect it to go there.”
The study found that private equity remained the most common private markets exposure, held by 86% of respondents investing in private markets, followed by real estate at 82%, private credit at 78% and natural resources and energy at 69%. But greater demand is also creating access problems, with 31% of respondents citing difficulty gaining entry to desired funds and managers as a top investment challenge, up from 18% in 2025.
Austin said the trend was not uniform across all types of asset owner. Some UK defined benefit pension schemes moving towards insurance buyout may become more cautious, because private market assets can be difficult, or sometimes impossible, to transfer to insurers.
But Austin said Northern Trust continued to see strong interest in private assets across insurance, sovereign wealth and pension clients.
Liquidity has also become a defining concern. Sixty percent of respondents said liquidity had become more important over the past 12 months. The report said the reasons had shifted from return-seeking towards risk management, with 60% citing the interest rate environment, 56% changes in risk strategy and 36% banking counterparty risk.
“The geopolitical uncertainty has created a requirement for a higher degree of cash liquidity,” Austin said. He added that asset owners were not necessarily holding cash because they wanted to stand aside from markets, but because they wanted flexibility to capture opportunities and meet commitments.
Private market allocations are also contributing to the liquidity challenge. Austin said some assets involve contingent commitments or future drawdowns, while currency overlays can require cash to meet profit-and-loss movements as positions roll through. Larger schemes investing directly in areas such as wind farms or solar farms may also need sizeable cash reserves to support construction or capital calls.
The survey also suggests that digital assets are moving into the institutional mainstream, though cautiously. Forty-seven percent of respondents reported some form of current digital asset exposure. Among those investors, 46% held cryptocurrencies and 44% held digitally native ETFs, while smaller proportions used tokenized assets, stablecoins, settlement tokens or blockchain infrastructure strategies.
However, adoption remains constrained by risk tolerance and regulation. Among respondents not investing in digital assets, 47% said the asset class did not meet risk tolerances, 44% cited volatility and risk, and 42% pointed to lack of regulatory clarity or compliance concerns. Austin said the issue was more nuanced than whether institutions were buying crypto, because distributed ledger technology could also improve operating models, including in defined contribution pension schemes.
Data and technology emerged as another central theme. Fifty-seven percent of respondents cited data integration as a top technology challenge, and the same proportion cited data accuracy. Austin said the increasing use of private markets makes this harder, because public market data is more standardised, easier to validate and simpler to analyse.
Artificial intelligence is becoming a major operational issue rather than a distant experiment. Sixty-eight percent of respondents named “harnessing the power of AI” as a top operational challenge, up from 56% in 2025.
