Aberdeen plc, the Edinburgh-based asset management giant, has published new research that suggests private markets can outperform traditional 60% equities & 40% bonds investment strategies as it set out an “8-point plan to make private markets work for public good.”
In a new paper called “Private market for public good, the opportunities and barriers to democratisation” Aberdeen suggests that giving individuals greater access to private markets “could potentially transform lives.”
Aberdeen said: “Currently, millions of savers face the prospect of inadequate retirement incomes, with traditional 60/40 portfolios under pressure in a low-yield, high-volatility environment.
“So, it’s no surprise to see private markets gaining traction, both at a policy and asset management level …
“Greater transparency and conversations about risk and value for money will be crucial to success, as is the need for a product neutral approach which understands that some vehicles will work better for certain types of investors than others. Investment trusts should not be overlooked.
“Aberdeen is not suggesting that traditional portfolios blending investments in equities and bonds should be replaced. But Aberdeen does believe there is a real place for private markets in more portfolios.
“Yet without addressing barriers such as transparency, benchmarking, and access, the benefits of private markets could remain out of reach for most individuals.
“Aberdeen’s 8-point plan calls for higher standards of disclosure across private markets as well as for a product neutral approach, given that some vehicles will work better for certain types of investor than others.
“Furthermore, while there is room for private markets in ISA portfolios, as per Chancellor Rachel Reeves’
recent Mansion House speech regarding LTAFs, pensions remain the ultimate wrapper due to their ultra
long-term nature.
“Aberdeen research suggests that private markets have outperformed a traditional portfolio of 60%
equities and 40% bonds significantly since 2007
“A diversified, equally weighted basket of private market assets would have delivered a total return of
370% between 1 March 2007 and 1 March 2025, whereas a 60/40 portfolio would have seen a 268%
increase over the same time period.
“However, it is important to remember past performance is no guarantee of future returns.”
Aberdeen manages and administers £517.6 billion of assets. Its investments business manages £367.9 billion on behalf of clients — including insurance companies, sovereign wealth funds, independent wealth managers, pension funds, platforms, banks and family offices.
Aberdeen has been a long-term investor into private markets and currently has £68.8 billion of assets under management (AUM) across real assets, private credit and alternative investment solutions. This includes Aberdeen’s specialist private market solutions team, which invests in a diverse range of private assets across the world via its Global Private Markets Fund (GPMF).
Xavier Meyer, CEO at Aberdeen Investments, said: “Private markets have huge potential to transform the lives of investors, as well as channelling investment into public services. But there are significant barriers to overcome.
“The everyday investor must remain at the heart of our thinking on private markets. That mindset was key to creating the 8-point plan we set out today. If we are to help ensure people benefit from the long-term potential of private markets, then pensions have to be front and centre.
“But running alongside that we need to tackle head on the issue of risk versus reward and value for money – conversations that can only happen if we also significantly improve transparency.”
Nalaka De Silva, Head of Private Markets Solutions at Aberdeen Investments, said: “Millions of people around the world are forecast to have an insufficient income in retirement due to low levels of pension savings.
“So it’s no surprise that attention has turned to the benefits private markets can offer. The long-term nature of private market investments, even versus publicly listed shares or bonds, should mean investors can demand a higher level of return over the very long term.
“But the risks entailed by private markets are very different, and we are not suggesting that traditional portfolios blending investments in equities and bonds should be replaced. Every private market sub-segment has its own dynamics so diversification is essential in mitigating risk within private markets as it is in public markets.”
John McCareins, Chief Client Officer, Aberdeen Investments, said: “A small though growing amount of private market assets are held by individual investors.
“In the UK, the investment trust sector is a case in point, with retail investors owning 7% of the infrastructure sector, 15% in renewable energy, and 9% in private equity, according to the AIC, the industry trade body.
“As an increasing number of companies go private or remain private, it will become harder for investors to access growth opportunities via public markets alone. It’s hardly surprising then that we have seen many asset managers snapping up specialist private market companies.
“What we do need to see is a product-neutral approach to policy and regulation – an approach which
understands that some vehicles will work better for certain types of investors than others.”