Two-thirds (66 per cent) of global institutional investors say they plan to increase their private asset allocations over the next five years, according to a new survey by investment manager Nuveen.

The survey, which polled more than 800 global institutional investors representing US$19 trillion in assets under management, found more than 90 per cent now hold both private equity and private credit, compared to 45 per cent in 2021.

Half (50 per cent) said they plan to increase allocations to infrastructure and nearly two-fifths (37 per cent) said they’re increasing their real estate holdings, up from 35 per cent and 24 per cent, respectively, in 2024.

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Data centres have emerged as a leading priority, with 65 per cent of institutional investors saying they plan to increase allocations to real estate focused on digital infrastructure, reflecting the rapid expansion of cloud computing and demand driven by artificial intelligence.

As allocations to alternatives grow, nearly 40 per cent of respondents said they’re expanding their roster of asset managers to navigate increasing complexity and specialization.

While fewer (61 per cent, compared to 71 per cent in 2022) institutional investors view the low-carbon transition as inevitable, the commitment to clean energy remains strong, with most survey respondents saying they’re prioritizing clean energy and carbon reduction either as part of net-zero goals or to capture compelling risk-return opportunities.

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In addition, more than two-fifths (44 per cent) said they have net-zero commitments, while 25 per cent plan to in the coming 12 months. Even among the roughly 30 per cent that don’t intend to set net-zero commitments, the majority (64 per cent) of these respondents said they’re investing in clean energy strategies or reducing carbon in their portfolios.

While 45 per cent of institutional investors identified nature loss among their top five economic risks, only three in 10 said they’re increasing their focus on nature-related themes within their portfolios. Among those prioritizing nature-based investments, 79 per cent are seeking strategies that go beyond sustainability to proactively mitigate environmental degradation.