UK private market fund managers believe SIPPs will play a major role in expanding sophisticated and high-net-worth investor participation in private markets over the next five years, according to new research.
The study from investment service Wealth Club found that 85% of private market fund managers believe increasing access to private market investments through SIPPs will have a positive impact on investor participation.
Almost one in four (24%) said they believed the impact would be very positive.
The optimism is already translating into product development, said Wealth Club. More than three-quarters (77%) of private market fund managers said they were likely to develop products specifically for investors using SIPPs over the next five years, with just 3% ruling it out.
The research also highlighted growing support for other tax-efficient wrappers. Around three-quarters (74%) of fund managers said they were likely to develop products suitable for ISAs over the next five years, although some continued to cite the UK's unique regulatory framework as a barrier to adoption.
Alex Davies, founder and CEO of Wealth Club, said: "The UK's SIPP market represents one of the biggest long-term growth opportunities for private markets. It's encouraging to see that fund managers clearly recognise that, with the overwhelming majority expecting SIPPs to play an increasingly important role in opening up private markets to sophisticated investors.”
He pointed out that for most individual investors, private markets have historically been largely out of reach but that semi-liquid funds are changing that. “They are opening up access to a much broader range of managers and strategies and removing many of the practical barriers that have held investors back in the past. They also remove the discount and premium volatility associated with listed investment trusts, allowing investors to focus on the performance of the underlying assets.”
He said the combination of semi-liquid fund structures and SIPPs has the potential to transform access to private markets for sophisticated investors.
He added: “As more managers launch suitable products, investors will have access to an increasingly broad range of institutional private market strategies within a tax-efficient pension wrapper."
• Wealth Club commissioned independent research company Pureprofile to interview 100 UK private markets fund managers working across the private equity, private credit, real estate and infrastructure sectors in June.