BlackRock sees wealth management allocations driving private markets' $20T surge

Wealth management allocations will be a major driver of industry predictions for growth of private markets to at least $20 trillion by 2030 (up from $13 trillion in 2024, according to a new report from BlackRock.

The asset manager expects the industry to be among the client segments boosting private markets with investors who make smart asset class choices set to benefit amid some key trends for the US and other developed economies.

Currently, allocations to private markets within the wealth management client segment is low at 1-2% for individual investors and almost zero for defined contribution systems globally, but the report notes that even small increases will drive growth.

In the US, BlackRock has partnered with Partners Group due to demand from advisors to provide access to  private equity, credit, real assets, and liquid alternatives within a model portfolio.

The BlackRock 2025 Private Markets Outlook, published today (December 16), expects that private credit and infrastructure will be the fastest growing asset classes thanks to demand for diversified funding sources and infrastructure investments in energy, AI, and data centers. These two asset classes make up around 20% of private markets in 2024 but the firm expects this to increase to 30% by 2030.

An important part of private markets growth is the energy sector and the report expects this portion to grow from $2.2 trillion now to $3 trillion by 2030. This strong outlook is a key reason for BlackRock’s recently announced acquisition of HPS Investment Partners and its acquisition of Global Infrastructure Partners earlier this year.

The report notes that investors prefer fewer, larger, and multi-product providers for portfolio-wide solutions.

Real Estate will also play an increasingly important role in private markets following a tough couple of years. BlackRock expects a rebound for the asset class although the tailwinds are not the same as for past cycles.

The easing of interest rates is a key factor for the real estate rebound but the report notes that the underlying market is sound.

“Unlike prior real-estate cycles, fundamentals have been relatively solid outside of the office sector, thanks to a tight labor market in many developed economies globally. We have also seen income growth hold up relatively well in many sectors, such as US industrials and US apartments,” the report states.   

Real estate opportunities are aligned with long-term structural trends around aging demographics in developed countries, properties that can facilitate e-commerce and new trade partners, as well as a heightened demand among tenants for energy-efficient buildings.

In the US specifically, sunbelt markets are expected to thrive, supported by diverse industries and robust population trends.