Product innovation and new technologies are accelerating the democratization of private markets, according to State Street’s new report, 2025 Private Markets Outlook: Driving success in volatile environments. The report reveals the biggest trends affecting institutional investors in Germany, drawing on our latest global survey of 480 investment firms.

We focus on three crucial themes, each of which has implications for the future of private equity, private credit, real estate and infrastructure.

The democratization of private markets: The survey highlights a shift toward retail-like products, with a majority of respondents globally saying that at least half of private markets fundraising will come through such products in as little as two years’ time.

In Germany, this trend is less established, with most respondents predicting traditional fundraising will dominate for now. Only 35 percent predicted at least half of fundraising will come through retail-style products in the short-term. This is perhaps due to the low number of local European Long-Term Investment Funds (ELTIFs) registered in Germany and the limited availability of diversified multi-asset-class private markets products to date. However, appetite for ELTIFs appears to be growing, so this trend toward retail-like fundraising is one to watch.

Several developments could help unlock this growth, Including technological advancements. In the survey, 40 percent of German respondents believe digital tokenization could open up private markets to defined-contribution investors. Meanwhile, governments and regulators may need to relax liquidity requirements and enforce better data reporting standards on private enterprises.

A focus on quality: The shift from quantity to quality is now entrenched in investment strategies. Private market investments are seen as a way to manage risk, with over two-thirds of German institutions increasing their private equity and private credit allocations as a strategy to enhance diversification.

The emphasis on quality can also be seen in a shift in capital allocation plans from emerging to developed markets. Developed Europe saw a significant jump in interest since last year’s survey, with 63 percent of limited partners (LPs) now planning investments in this region within the next two years (up from 43 percent in 2024). The shift in sentiment suggests that Germany’s attractiveness for private markets investments could be on the rise.

AI adoption in private markets: The AI revolution is already underway. A significant majority (85 percent) of German respondents recognise the opportunity to use GenAI-based large language models to generate analyzable data and insights from unstructured information.

The report goes on to explore why private markets are proving to be resilient at a time of increased market volatility and geopolitical uncertainty, as well as which private asset classes are most likely to benefit from the three trends outlined above.