Research into allocation habits of European fund selectors conducted by Research in Finance in conjuntion with Neuberger Berman has found growing exposure to private equity across both institutional and retail channels.
The findings are based on qualitative insights from 886 European, including UK, fund selectors working across both channels.
The research found a net 29% of retail allocators - who allocate to or recommend private equity - increasing private equity weightings relative to a year ago, versus a net 9% rise at the institutional level.
Differences exist between countries in the region. For example, among Spanish selectors there was a net 41% of allocators elevating private equity positions. A net 32% of Swiss selectors also heightened allocations, followed by Italy at 23%. In contrast, more British selectors indicated a decreased than increase in allocations over the past year.
Looking ahead, the aggregated responses suggest selectors in the retail channel are particularly positive about the prospects for private equity, with a net 26% likely to increase positions over the coming year – compared to a net 4% within institutional.
Swiss and Spanish selectors are those most likely to increase exposure over the coming year, with a net 30% and 28% of allocators, respectively. In the UK, a net 22% are planning to boost private equity positions.
In terms of types of opportunities being sought out, the resarch suggests both retail and institutional selectors singled out small/mid-cap buyout as the most attractive area in today’s market environment. This was followed by growth equity and venture capital.
The rise of the European Long-Term Investment Fund, or ELTIF, structure was recognised, with more than half of pan-European investors familiar with vehicle. About two-thirds of Benelux and Italian selectors have total familiarity with the structure, with 15% of Italian respondents already recommending the strategies.
José Cosio, head of Intermediary EMEA & LatAm at Neuberger Berman, said: "It is evident the ELTIF structure, of which Neuberger Berman was an early adopter, is gaining momentum across pan-European investors. This is driven by the need for investors to seek portfolio diversification and sources of long-term robust returns."
"Despite public market volatility, we continue to see significant deal flow across Neuberger Berman’s $115bn private markets platform with on average 11 deals per week across co-investments in 2023. This volume continues to enable the team to take a highly selective approach to building a diversified portfolio of direct private equity investments alongside leading private equity managers."
"With a healthy pipeline of new investment opportunities supported by growing allocation to ELTIF private market strategies, we believe this structure will become the gold standard of investor access in years to come."
