White Paper - Private markets in transition: From allocation to portfolio integration
EXECUTIVE SUMMARY
Private markets in Asia Pacific (APAC) are entering a more disciplined phase of institutionalisation – defined less by rapid allocation growth and more by deliberate portfolio integration.
Findings from the AsianInvestor “APAC Private Markets Pulse 2026” – covering 83 asset owners from 65 institutions (75% insurers) across six markets – highlight a shift in mindset. While 50% expect to increase allocations over the next 12 months, most anticipate incremental changes of 5% or less. With 49% targeting net returns of 8% to 10%, demand is centred on income-oriented strategies such as infrastructure debt and private credit.
What has really changed? Private markets are evolving from opportunistic exposures to core building blocks. The key shift is not allocation size, but implementation – moving from access to integration, focusing on income, diversification and alignment within multi-asset portfolios.
What are the new challenges? Investors must balance return, capital efficiency and liquidity (the primary barrier), Regulatory capital frameworks and governance demands are raising the bar on transparency, structuring and oversight, slowing allocation growth and increasing execution challenges.
What is “good” integration”? This means being outcome-driven – embedding private markets into portfolios from the outset, aligned with liabilities and integrated alongside public assets. Success is increasingly client-specific, with scenario analysis and a focus on resilience, income and flexibility.
Why do insurers care so much? The shift is more pronounced for insurers. Liability-driven mandates and capital regime changes are accelerating adoption, with greater emphasis on ratings, governance and capital efficiency. This makes private markets integral to yield generation, liability matching and balance sheet optimisation – making discipline, not growth, the defining theme for 2026.
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Key survey highlights
1. 50% of respondents expect to increase private markets allocations over the next 12 months.
2. 49% target net returns of 8–10% over the next 12 months, with 28% seeking above 10%.
3. Infrastructure debt and private equity are notably the most preferred asset classes in the coming year – followed by direct lending.
4. Risk-adjusted returns are the dominant allocation driver of private markets allocations this year.
5. Liquidity constraints represent the clear primary barrier to increasing private markets allocations.
6. 49% with an allocation to private assets expect their organisation’s appetite for new private markets offerings to increase over the next 12 months.
7. Segregated mandates are preferred (58%), with Luxembourg and LP structures dominant for pooled vehicles.
8. 46% prefer line-by-line external ratings for unrated assets.
9. Access and origination is by far the most valued manager capability for investors looking to support their private market strategy.
10. Track record across cycles is notably the most important selection criterion when assessing third-party asset managers for private market assets.
Click here for deeper insights and analysis - and explore the three key themes shaping private markets allocations and strategies among Asia-based asset owners:
Theme 1: Structural growth – measured not aggressive
- Private markets adoption in APAC is expanding, but in a disciplined, incremental way with modest allocations – constrained by liquidity, regulatory capital and governance requirements.
- Investors are shifting from simply gaining exposure to taking a more deliberate, portfolio-led approach, positioning private markets as integrated components of strategic asset allocation (SAA).
Theme 2: Balancing return, liquidity and capital
- With return expectations converging around 8% to 10%, investors are focusing on income-oriented strategies such as infrastructure debt and private credit. However, this requires balancing return, liquidity and capital efficiency.
- Investors are increasingly engineering liquidity at the portfolio level to capture illiquidity premia while maintaining flexibility and resilience.
Theme 3: Evolving the approach to implementation
- As allocations grow, the focus has shifted from access to execution. Investors are embedding private markets into portfolio construction, balance sheets and liability frameworks, with greater emphasis on transparency, governance and capital efficiency.
- Success now depends on how effectively private assets are structured, integrated and managed within the overall portfolio.
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