Retail Shift Reshapes Private Markets

State Street’s fifth annual Private Markets Study, “Resilience Meets Opportunity,” shows that private markets demand remains highly resilient, even amid geopolitical uncertainty, inflation pressures and market volatility. Just 7% of firms expect to reduce allocations, while half plan to increase exposure, reinforcing private markets’ role as a core component of long-term portfolio construction.

At the same time, the industry is undergoing a structural shift toward individual investor participation, as firms expand access through wealth channels. More than 84% of asset and wealth managers either already offer or plan to offer private markets strategies for individual investors, signaling that access has moved from a long-term ambition to a core component of industry strategy.

“The private markets story is defined by resilience on one side and reinvention on the other,” said Joerg Ambrosius, president of Investment Services at State Street. “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.”

While expanding access to individual investors remains a defining opportunity, firms are becoming more measured about the pace of growth. Around 43% of organizations 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 prior year’s survey, reflecting a more realistic view of operational and distribution challenges. Demand is being driven primarily by diversification and return potential, as well as access to key investment themes.

The study also points to a clear shift in where capital is being deployed. Artificial intelligence and AI infrastructure rank as the top investment theme globally, underscoring private markets’ role in financing long-term structural growth across economies.

“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,” said Donna Milrod, chief product officer at State Street. “AI, infrastructure and other structural opportunities are reinforcing the asset class’s role as a core portfolio allocation. Firms will have to continue adapting to meet demand from a broader range of investors.”

As firms scale private markets strategies to individual investors, operational complexity is emerging as the defining challenge, as asset and wealth managers adapt to serving a larger and more diverse client base. Nearly eight in ten respondents cite liquidity management as a key challenge, with specific pressure points including redemption management, cash forecasting and liquidity stress testing as firms adapt to more dynamic investor flows. Compliance, reporting and investor servicing are also increasing as firms move beyond institutional client bases.

“Democratization is raising the bar for how private markets are structured and supported,” said Scott Carpenter, global head of Alternatives at State Street. “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 highlights a clear consensus on distribution. Wealth management platforms are viewed 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.

The survey also reveals that institutional investors’ demand for private markets remains notably resilient despite ongoing market and geopolitical uncertainty. Demand is being driven primarily by return expectations and diversification benefits, reinforcing private markets’ role as a core allocation in long-term portfolio construction.

Taken together, the findings point to an industry entering a more demanding phase where 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 toward firms that can deliver quick liquidity frameworks, transparency and performance at scale across both institutional and individual investors.

Click here to download the findings in State Street’s 2026 Private Markets Survey.

Source: State Street Corporation