Institutional investors continue to deepen their commitment to private markets as they pivot to a more risk-on posture and seek new opportunities amid macroeconomic uncertainties, says a new report.

About 66% of investors plan to increase allocations to private assets over the next five years, according to the latest EQuilibrium Global Institutional Investor Survey conducted by Nuveen, the investment manager of the Teachers Insurance and Annuity Association of America - College Retirement Equities Fund ( TIAA ).

The survey gathered the views of 800 major institutional investors representing US$19 trillion in assets under management on markets and other issues influencing their asset allocation decisions.

More than 90% of respondents now hold both private equity and private credit, a sharp rise from 45% in 2021, underscoring the expanding role of private markets in institutional portfolios.

“Private market flows remain resilient, with funding sourced from public asset outflows, cash reserves, and new capital,” says Harriet Steel, global head of institutional at Nuveen. “Even those adjusting allocations within private markets are largely reallocating rather than exiting.”

Focus on high-growth areas

Private infrastructure, credit and equity continue to attract significant attention, with nearly half of investors planning to expand allocations to these areas. Within these categories, investors indicated that private equity is where they plan to make the greatest increase.

Private infrastructure and private real estate saw the biggest year-over-year increases in the percentage of investors planning to increase allocations – from 35% and 24%, respectively, in 2024 to 50% and 37% in 2025.

Also, investors are being selective in targeting specific high-growth areas within both markets, such as data centres and private infrastructure debt, the survey finds.

Data centres have emerged as a leading priority, with 65% of investors planning to increase allocations to real estate focused on digital infrastructure, reflecting the rapid expansion of cloud computing and AI-driven demand.

Government initiatives aimed at modernization and sustainability are further fuelling investor interest in infrastructure. Over 30% of investors who are planning to increase private fixed income assets are looking at energy infrastructure credit.

More pragmatic view

Institutions are grappling with the dual imperatives of addressing climate risk and capturing attractive return opportunities.

They are adopting a more balanced and pragmatic view of the energy transition, with 73% of respondents agreeing that near-term energy needs cannot be met without incorporating both traditional and renewable energy sources.

“We are seeing a shift towards strategies that combine the practicalities of current energy needs with the ambitions of a sustainable future,” says Steel.

While fewer investors now view the low-carbon transition as inevitable – 61% compared with 79% in 2022 – the commitment to clean energy remains strong, with most institutions prioritizing clean energy and carbon reduction either as part of net-zero goals or to capture compelling risk-return opportunities.

Overall, 44% of institutions have net-zero commitments while another 25% plan to in the coming 12 months. Even among the roughly 30% who do not intend to set net-zero commitments, the majority ( 64% ) say they are still investing in clean energy strategies or reducing carbon in their portfolios, according to the survey.

Interim milestones are gaining traction. More than half of institutions ( 51% ) with net-zero goals have set interim 2030 targets, while 37% have established 2025 benchmarks to guide short-term progress. The vast majority of investors with 2025 goals ( 95% ) say they are on track or partially on track to meet those targets.