The study reveals that private markets continue to attract strong investor demand, with only 7% of firms planning to reduce their allocations despite the challenging market environment. In fact, nearly half of the firms surveyed intend to increase their exposure, underscoring the role of private markets as a core component of long-term portfolio strategies.

Joerg Ambrosius, president of Investment Services at State Street, emphasised the dual nature of the current private markets landscape. "The private markets story is defined by resilience on one side and reinvention on the other," he stated. "Demand remains strong but delivering private markets to a broader investor base at scale is fundamentally reshaping how the industry operates. Success will depend on who can manage complexity and deliver consistent outcomes across a much wider set of clients."

A key finding of the study is the shift towards individual investor participation, with more than 84% of asset and wealth managers either already offering or planning to offer private markets strategies to individual investors. This marks a significant change from a long-term ambition to a core industry strategy, as firms expand access through wealth channels.

However, as firms scale their private markets strategies to individual investors, they face new operational challenges. Nearly eight in ten respondents cited liquidity management as a critical issue, with specific pressure points including redemption management, cash forecasting, and liquidity stress testing. Compliance, reporting, and investor servicing are also becoming increasingly complex as firms move beyond their traditional institutional client bases.

Scott Carpenter, global head of Alternatives at State Street, highlighted the complexities of this transition. "Democratization is raising the bar for how private markets are structured and supported," he said. "Delivering these strategies at scale requires more than product innovation. It requires the infrastructure, data and operational capabilities to provide transparency, manage liquidity and meet the expectations of a very different investor base."

The study also points to a clear shift in investment themes, with artificial intelligence and AI infrastructure emerging as the top focus globally. This highlights private markets' role in financing long-term structural growth across economies. Donna Milrod, chief product officer at State Street, noted the importance of these themes. "Even in a more uncertain environment, private markets are increasingly where investors access the most important long-term growth themes, serving as a critical source of returns and diversification," she said. "AI, infrastructure and other structural opportunities are reinforcing the asset class’s role as a core portfolio allocation."

Despite the challenges, the survey indicates that institutional investors' demand for private markets remains robust, driven primarily by return expectations and diversification benefits. This resilience reinforces the role of private markets as a core allocation in long-term portfolio construction.

As the industry adapts to these changes, firms are taking a more measured approach to growth. Around 43% of organisations now expect individual-focused vehicles to account for at least half of private markets fundraising within the next three years, down from 56% in the previous year's survey. This reflects a more realistic view of the operational and distribution challenges involved.

In terms of distribution, wealth management platforms are seen as the primary channel for private markets access, while defined contribution structures remain a secondary pathway for most firms. This reflects both investor suitability considerations and the role of financial advisors in navigating more complex investment structures.

Taken together, the findings of the State Street study suggest that the private markets industry is entering a more demanding phase. Growth, resilience, and innovation must be matched by operational discipline and scalability. Private markets are no longer defined solely by access; instead, competitive advantage is shifting towards firms that can deliver quick liquidity frameworks, transparency, and performance at scale across both institutional and individual investors.