Japanese institutional investors are slowing their allocations to private assets, according to a new report by Crisil Coalition Greenwich.

It found the share of Japanese institutional investors, including pension funds, endowments and foundations, that are planning to significantly increase private debt allocations in the next three years dropped roughly 10 per cent to 16 per cent in 2024. Similarly, the share of investors planning private equity allocations declined to 10 per cent.

Read: 66% of institutional investors increasing private asset allocations: survey

A tenth (13 per cent) of respondents think expected allocations to infrastructure assets will significantly increase in the next 13 years followed by real estate (11 per cent).

The report identified a loss in momentum for environmental, social and governance investment trends hasn’t severely impacted the reliance on the criteria in Japan. Indeed, most asset owners think the influence of ESG will remain the same in the coming years. About half of investors consider ESG when selecting asset managers.

In a press release, Seiji Ishii, head of investment management in Japan at Crisil Coalition Greenwich and author of the report, said institutional investors are committed to private assets but want to be more deliberate in their moves this year.

“The slowdown could simply reflect capacity constraints in a global private debt market that is still growing and maturing and the many new internal challenges investors everywhere face in building up allocations to illiquid asset classes. However, the magnitude of some of these changes could suggest a broader strategic shift in the face of tightening by the Bank of Japan and the increase in [Japanese Government Bonds] yields to the highest levels seen in decades.”

Read: Institutional investors increasingly eyeing private assets amid shifting interest rates, diversification push: report