Institutional Investors Reassess Private Market Strategies Amid Recent Turbulence
Institutional Responses to Private Market Volatility
By Oliver Hirt
ZURICH, June 15 (Reuters) - Institutional investors are looking more closely at private market investments after recent turbulence at firms such as Partners Group, Swiss pension fund consultants said.
Recent Market Events and Their Impact
Partners Group capped withdrawals from a major evergreen private equity fund this month after increased redemptions, unsettling markets. A similar move by Blackstone in a large private credit fund underscored broader concerns.
Scrutiny of Private Credit and Valuations
Investors have been focused on problems appearing in loans by private credit funds run by big asset managers, and have been scrutinizing valuations, lending standards and how software companies can handle AI challenges.
Private market investments have lagged tech-driven stock gains, prompting exits, the consultants said.
Retail vs. Institutional Investor Behavior
Outflows have been driven mainly by retail investors, who generally react faster to volatility and short-term performance.
Institutional investors are not exiting, but are becoming choosier about their strategies, the consultants said.
Shifts in Allocation and Sentiment
Private wealth clients account for about a fifth of Partners Group's $185 billion in assets under management. The firm confirmed its outlook for 2026 despite the turmoil.
Institutional investors have so far maintained their allocations, but in some cases could delay new commitments, said Stephanie Spozio at consultancy Prevanto.
Growing Caution and Liquidity Concerns
But sentiment is becoming more wary, and investors are looking at products more closely, particularly their liquidity terms, said Romano Gruber of consultancy PPCmetrics.
Thomas Breitenmoser at pension advisor Complementa said one or two clients are nervous and asking about Partners Group.
Some pension funds may ultimately cut private markets exposure by allowing existing programmes to run out without reinvesting, he added.
Performance Divergence and Future Outlook
Concerns Over Private Credit Liquidity
There are concerns about private credit, where some funds were sold on the basis of easy liquidity terms despite doubts about their feasibility, said Benita von Lindeiner of c-alm.
Manager Performance Differences
Performance differences among managers in private markets were becoming noticeable, she said.
"In the coming weeks, the wheat will be separated from the chaff," she said.
(Reporting by Oliver Hirt; Editing by Susan Fenton)
