Private equity firms are increasingly targeting everyday investors, according to a recent report by Apex Group. The study, titled “Leading the Shift: Transforming Private Markets in a Retail-Driven Landscape,” found that 86% of private equity firms expect alternative investments to dominate retail portfolios within the next five years. The report, based on insights from senior leaders in funds with assets under management ranging from under $1 billion to over $50 billion, highlights the growing retail demand for private markets.
Private equity and real estate are leading this demand, with 97% of asset managers reporting strong or moderate retail interest in these sectors. Peter Hughes, founder and CEO of Apex Group, stated, “These findings underscore the major shift we’re witnessing in private markets as retail investors are now driving significant demand across alternative asset classes such as private equity and real estate.”
Technology is playing a critical role in driving this retail shift. Nearly 70% of asset managers see digital platforms as key enablers of retail participation, while 58% highlight blockchain and tokenization as game-changing technologies for private market distribution.
However, the report also identifies regulatory restrictions (59%) and liquidity concerns (43%) as the top barriers to retail investor participation in private markets.
Growing demand for private equity investments
The study reveals that 76% of firms have embraced outsourcing, with cost efficiency (70%) and time savings (71%) cited as the top benefits.
Additionally, 65% of firms have engaged in lift-outs, transitioning in-house functions to third-party providers to drive better technology solutions and specialized talent. The report captures perspectives from major financial hubs, including the US, UK, Hong Kong, and Singapore, offering a comprehensive analysis of the factors driving the transformation in private markets. As private equity firms seek to tap into everyday investors’ funds, they are partnering with traditional asset managers to offer more liquid investment options.
Major firms like KKR, BlackRock, and State Street Global Advisors have already entered such alliances, launching hybrid investment products that blend public and private assets. However, challenges remain in this shift towards retail investors, including concerns about liquidity, valuation, fees, and regulatory scrutiny. Despite these hurdles, the growing appetite for alternative investments among everyday investors is set to reshape the private equity landscape in the coming years.
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