State Street: Retail Investors Expected to Dominate Private Markets
The democratization of private markets has been all the rage as new types of vehicles have been introduced and investor education has been ubiquitous. According to a survey by State Street, the market could be taken over by the retail segment in the coming years.
In the next one to two years, at least half of private market flows will come through semi-liquid, retail-style vehicles marketed to individuals, as expected by 56 percent of institutional investor respondents in State Street’s 2025 private markets survey report entitled «The New Private Markets Advantage». This compares to 47 percent in the 2024 survey.
In contrast, 39 percent believe that traditional fundraising will account for the majority of flows, down from 51 percent in the previous year.
APAC Most Optimistic
APAC was the primary driver for these expectations with 34 percent of respondents in the region believing in the likelihood of lower flows from traditional sources compared to 41 percent in EMEA (Europe, the Middle East and Africa) and 43 percent in the Americas.
While Asia was not significantly more likely to predict retail dominance, a higher proportion did anticipate parity at 41 compared to 34 percent in EMEA and just 28 percent in the Americas.
Product Innovation as Top Driver
According to the survey, product innovation in the semi-liquid fund space is the top driver of retail adoption, as agreed by 44 percent of respondents. This was followed by lower means-based barrier to entry, including wealth and income thresholds (42 percent), and relaxed laws and regulations on the liquidity of underlying assets (39 percent).
«The democratization of private markets is a trend that has been underway for a number of years; however, 2025 has the potential to be a watershed year for retail allocations to private markets. Distribution to wealth channels and retail fund flows could become the dominant contributor to future fundraising,» said Donna Milrod, chief product officer and head of digital asset solutions at State Street.
The report was based on a survey commissioned by State Street and conducted by CoreData Research with 500 respondents from buy-side investment institutions including private markets specialist managers, generalist asset managers with private markets portfolios, and institutional asset owners in the first quarter of 2025. The respondents were based in four regions across North America, Europe, the Middle East and Asia Pacific.