Private markets are no longer about access — they are about integration

Echo Yang

Senior Solutions Director, Strategic Insurance Group, Aberdeen Investments

For years, the conversation among institutions in Asia Pacific (“APAC”), in particular insurers, around private markets centred on one question: how quickly institutions could build exposure. That phase is ending. Today, the more important question is not how much insurers allocate to private markets, but how effectively those assets are integrated into the broader portfolio. That shift marks a more mature phase for the region — and it also redefines the role of asset managers.

The latest findings from our survey conducted this year suggest that private assets are becoming a strategic building block rather than a tactical allocation. In our recent survey covering over 80 asset owners in six APAC markets, 50% expect to increase allocations over the next year, but most expect to do so only incrementally, by 5% or less. Nearly half are targeting net returns of 8% to 10%, while infrastructure debt, private equity and direct lending remain among the most favoured areas for future allocation in the coming year. At the same time, liquidity constraints remain the single biggest barrier.

These findings reveal something important: this is not a story of indiscriminate expansion. It is a story of disciplined implementation. Investors in this region are no longer simply seeking access to private assets. They are asking what role those assets should play in delivering income, diversification, capital efficiency and resilience within the total portfolio. In other words, private markets are moving from product selection to portfolio design.

That shift is especially significant for insurers. Unlike many other institutional investors, insurers approach private markets through the lens of liabilities, solvency and balance sheet efficiency. Our survey shows that insurers continue to have stronger conviction to increasing private markets exposure than the broader market, but they are also more measured in execution, more demanding on transparency and ratings, and more open to structured implementation where it improves operational efficiency and diversification. More than half of APAC insurer respondents plan to increase allocations, while 52% now demand external ratings and 48% favour pooled vehicles to support implementation.

This matters because insurers do not have the luxury of thinking about private markets in isolation. Every allocation decision must be evaluated against liquidity needs, regulatory capital regimes and the ability to meet future policyholder obligations. That is why the central insight of our survey results is so compelling: good integration means embedding private assets into strategic asset allocation from the outset, alongside public assets, rather than treating them as a standalone sleeve added later.

For asset managers, this has profound implications. The old value proposition such as access to deals, manager selection or participation in large fund launches while remaining key considerations in our survey — is no longer enough on its own. In an environment where alpha increasingly comes from underwriting discipline, relative value and construction rather than broad market beta, insurers need managers who understand how to build multi-objective portfolios, not just fill them.

As private markets become more institutionalised, insurers need managers who can help solve for multiple objectives simultaneously: income generation, liability matching, capital efficiency, liquidity management and governance. The manager’s role is evolving from product provider to portfolio partner.

Take liquidity, still the dominant barrier to greater allocation. The answer is not simply to avoid illiquidity; it is to manage it intelligently. In fact, liquidity can be designed at portfolio level through laddered maturities, evergreen structures and the deliberate blending of public and private assets. That is precisely where a skilled asset manager can make a difference. Rather than offering insurers a one-size-fits-all private market allocation, managers can help engineer cashflow profiles and reinvestment flexibility in ways that support both yield objectives and balance sheet resilience.

The same is true of portfolio construction. Private credit, for example, is often discussed as if it were a uniform allocation bucket. In reality, it is a much more selective market. Direct lending may remain a core exposure, but it is increasingly crowded. Infrastructure debt offers longer-duration, stable income that can align well with insurer liabilities. Niche credit and private placements may offer additional alpha, but they come with different risk and complexity profiles. The challenge is not choosing one winning segment; it is combining the right exposures in the right proportions to serve a defined portfolio objective.

Implementation is the next frontier. As private asset allocations scale up into a core component of an outcome-driven strategic asset allocation, insurers will be expected to apply more public-market-like standards of governance to them. That means better reporting, stronger scenario analysis, more sophisticated asset-liability modelling, and greater scrutiny over external ratings, structures and cashflow control. It also means that private markets must be analysed, monitored and governed with the same rigour as public assets. For insurers operating across Asia Pacific, where regulations, currency considerations and hedging needs vary significantly by market, that implementation challenge becomes even more complex.

Here, too, asset managers can add significant value — not simply by manufacturing or providing access to these products, but by helping insurers navigate suitability, structure and capital treatment in a fragmented regional landscape. Our survey shows clear preferences for segregated mandates for control (58%), as well as for Luxembourg and LP structures for pooled vehicles (42%), while external ratings are increasingly important for capital optimisation. These are not administrative details; they are fundamental to whether a private markets strategy can work effectively inside an insurance balance sheet.

The broader lesson is clear. The next stage of private markets investment will not be defined by who can allocate the fastest. It will be defined by who can integrate the best. For insurers, that means building portfolios that can balance return ambitions with liquidity realities, capital constraints and liability obligations. For asset managers, it means rising to a more demanding brief: delivering tailored and capital-aware solutions that help private assets function as effective components of the whole portfolio, not isolated return engines.

Private markets are no longer about access alone. They are about architecture. And in that new era, the most valuable asset managers will be those that best understand and can successfully implement private markets into respective insurers framework. Ultimately, helping insurers to continue meeting their policyholders’ obligations especially in an increasingly uncertain environment.