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KATHERINE LUCAS: So great to be joined today by Scott Carpenter and Susan Doyle. And we are going to dive in to a fantastic and fast-tracked conversation around all things private markets. So I think I want to start really with kind of the obvious question. Right? Growth in private markets. It's been huge recently.

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I think a lot of it we've seen is really due to this kind of trend around democratization in private markets, as well as the increase in semi-liquid funds that we're seeing. But I want to hear from each of you, Susan, perhaps I'll start with you. Your views on what's happening in the market.

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SUSAN DOYLE: There's been an explosion of new products traditionally semi-liquid funds were available only to institutional investors in areas like core real estate and infrastructure.

That vehicle has now become available in many different types of private market sectors and become available particularly importantly to retail investors. Whereas minimum investments used to be 5, 10, 25 million for institutional investors. Those numbers have fallen dramatically. And for $1,500 in some cases, retail investors can access these private market sectors. Semi-liquid vehicles are, a different beast than what many investors are used to. And quarterly liquidity potential is very important to emphasize that it's the potential for quarterly liquidity, not automatic liquidity, really makes a difference in accessing the private markets for those individual investors.

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SCOTT CARPENTER: And I think that's right. And, and I think it's important to define, too, what democratization actually means, because some people confuse that. I think sometimes with retail. And I'd say that we're on a march towards eventual retail. We've gone from ultra-high net worth to institutional investors. The push today is really out through wealth so the mass affluent and I think we're on the doorstep of seeing many more products launched, for defined contribution retirement plans. There's still work to do, I think, across the industry ecosystem to get to a true retailization, including relaxing some of the restrictions on what types of investors can be in these products. But, to Susan's point, we have seen an incredible proliferation of these products in a variety of different vehicle wrappers as well. So business development companies, Opcos, tender offer funds, ELTIF, ELTAF in Europe, and obviously interval funds have been, a bit of a flavor of the year. In terms of folks launching new products. So definitely, an explosion of these, as Susan said.

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KATHERINE LUCAS: So I want to shift a little bit now to another big trend that we're seeing is the idea of quality over quantity. So our latest research is suggesting that expected 3 to 5 year PM allocation increases are kind of starting to level out a little bit for LPs and GP's. And then we saw in our 2024 study the deal due diligence and risk assessment were really growing priorities in PM operations.

So I suppose my question, Susan, that I'd love you to touch on it, if you wouldn't mind, is, is this focus on deal quality over quantity? Has this really become entrenched in asset allocation approaches? Is Does this tally with what you're seeing in the market?

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SUSAN DOYLE: It does. I think in times of turbulence and uncertainty, people do seek quality.

Also investors have been receiving fewer distributions as private equity in real estate exits have taken longer than, historically. And therefore their allocations, are somewhat static. They aren't able to, commit to new funds either, follow on funds or new strategies while they're waiting for the return of capital from their existing strategies.

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SCOTT CARPENTER: And in addition to Susan's points about, institutional investors looking at their allocation and, and looking to rebalance in some cases, that's been a challenge historically, with private equity investments, which tend to be illiquid and tend to have 7 to 10 year locked capital. But we've seen the advent, of a whole new generation of secondaries funds that are actually negotiating exits from private equity funds on behalf of institutions, and introducing new capital into those funds at the same time. So very interesting in terms of another method to try to create liquidity and an interesting servicing opportunity for State Street, as well.

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KATHERINE LUCAS: So we've hit on a number of trends that the market is seeing. I'm going to hit on a third trend. You know, you can't have a conversation without talking about AI and generative AI.

Now in this instance, right. Technology and data is a major part of institutions strategies for improving their private markets operations and due diligence. And I think we've seen that significant utility could potentially be generated by new generations of AI that could potentially help analyze unstructured textual information and even convert all of that to repeatable data. So I'd love to understand. And, Scott, maybe I'll come to you first. What are some of the use cases that we're seeing out there for Generative AI and LLMs?

00:05:20:03 - 00:05:34:10
SCOTT CARPENTER: Yeah, for an operating perspective, I think it's well known fact that this is a challenging ecosystem. There is a lot of manual conveyance of information. There's a lot of unstructured data trying to pull together things and have them digitized. Automated is a challenge. I think every firm that you talk to has an ambition to double or triple their assets under management via private markets, but nobody wants to double or triple their operating and tech budget to support that growth. So interestingly, in a survey that we recently issued this year, 83% of firms are planning to use gen AI and adopt it into their environments to create more efficiency. Last year, it was only 58% of firms were thinking that. So a lot of people are looking at it. And some of the specific use cases that I would point to for credit investing. As an example, trying to get information and updates from agent banks is a very difficult, painful process which involves faxes still in 2025, a lot of screen prints, a lot of updates along those lines. So we ourselves at State Street and others in the market are looking at tools that are more sophisticated than your traditional OCR tools to try to digitize more of that information to begin with. And the other good example, I think, is for administering fund to fund portfolios, you need to collect a vast amount of information from funds, from managers, from other administrators, most of which does not come in an easy digitized format. So again, we are working with a number of different firms to create better data acquisition and orchestration into our environment that reduces some of that operational friction in the ecosystem.

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KATHERINE LUCAS: Susan, would you like to comment on the AI topic?

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SUSAN DOYLE: I would and I agree completely with what Scott said as a limited partner, it is very difficult to get any look through information or deal level information when you're investing in fund of funds or in secondaries vehicles, relative to primary investments in vehicles.

I think also, one of the underappreciated facts about these evergreen funds is that the exit decision is transferred from the general partner to the limited partner. Every quarter that you stay in a fund is a decision not to get into the redemption queue and exit, and the ability to analyze the outlook for hundreds of underlying investments in many cases, is one that I think AI will be greatly beneficial.

KATHERINE LUCAS: Well, this has been a wonderful, quick hit, but wildly interesting conversation with the both of you. It is so wonderful to see you both, as always. I hope to bring you back soon so we can continue our conversation. But thank you so much for joining me today.

Liz Pfeuti: Hello. My name is Elizabeth Pfeuti and I'm joined today by State Street's Head of International, Cuan Coulter and James Redgrave, who is Vice President of Global Thought Leadership at State Street too. And we're here to talk about the fourth annual State Street Private Markets survey. And this year, the private market survey spoken to nearly 500 institutional investors, including asset owners, asset managers and a whole array of assets and capital market allocators to talk about their themes and ideas and what trends are going on in private markets.

It is a huge survey, and it's also available on statestreet.com if you want to have a dig into it after you've watched us on this video. But first of all, James, I want to come to you and ask you, what are the key global themes that have appeared in the Private Markets survey this year? What's really peaked your interest?

James Redgrave: Thanks, Liz. So one of the most important themes that's come through in this year's survey is a real flight to quality in private markets investments. So we've seen a sort of slowdown in the rate of growth. People are still increasing their allocations, but the rate at which they're doing so has slowed down.

And in relation to that, we've seen a real increase in focus on due diligence and risk assessment, at the portfolio and the individual holding level as people are seeking quality over quantity. Also, we've seen a flight from developing markets to developed. So developed Europe in particular has seen, a significant increase in planned allocation growth, across the board, and that's largely been at the expense of developing Europe and developing APAC. So that's one big theme.

Another big theme is democratization and the growth of semi-liquid and retail style funds. And more than half now of our respondents expect at least half of flows into private markets to come through that type of vehicle, now over the next couple of years.

Liz Pfeuti: Great. There's a lot going on, Cuan. So how does State Street support it’s clients when there's a quite a bit of change going on and given everything that's going on out there as well. So what’s State Steet been doing?

Cuan Coulter: I guess I'll echo a lot of what James is saying based on what's happening in the field. So at State Street, we have the privilege of managing or, administering close to $3 trillion worth of private market assets. And, as both a global service provider and an asset manager, we get to see the entire value chain, if you will, the sort of life cycle of a private fund.

So we're potentially uniquely positioned to sort of understand what's going on at the grassroots level of private assets. I guess the observations that I would highlight that, I think echo some of what is coming through in the survey is that, the conditions for private markets are likely to continue to be uneven for the foreseeable future. Some of that is geopolitical. Some of that is market specific. But James referenced the fact that it's a quality over quantity game, and I think that's true.

The other observation I would make is, there continues to be growing interest in private markets in general. And there's, if you will, confidence that, in aggregate terms, private markets continues to be a place that will be a resilient investment option for clients.

Liz Pfeuti: And are you seeing a split, we keep hearing a lot about the retail investor and the non-institutional investor. I think it's probably fairer to say. Are you seeing the interest coming through from retail investors and if so, how are asset management clients, I suppose working and creating products for them? And how are you supporting them to do that?

Cuan Coulter: You’re right Liz. A lot of product innovation in the marketplace involves democratization in some way, shape or form. We're starting to see growing momentum, like here in the UK you have the LTAF product and in Europe you have the ELTIF, which are all attempts at being able to get retail investors into, the asset class, given the return streams that have historically been found in private markets.

I think James referenced this already, but I think something like 50% of the survey respondents feel like that's the sort of the next two years’ worth of product innovation for private markets.

Another place I might highlight is the Middle East, our client base in the Middle East is, typified by asset owners and I would say asset owners have an unprecedented, appetite for private markets. Some of that comes from the investment thesis. Some of that comes from the fact that, some of these asset owners have also kind of national interest priorities and some asset classes like infrastructure are particularly appealing to them.

Liz Pfeuti: And how about APAC? Because obviously that's a big opportunity. Lots of different investors over there. Where are they looking? What asset classes are they looking for?

Cuan Coulter: I'd say in APAC, the top choices for investors are private equity and private credit.

Liz Pfeuti: So, James, let's go back to what your data is showing from the survey. And these trends, data quality and retail style distribution, needs asset managers and the asset owners to really kind of look at their operations and see what's going on under the hood. So what have you heard from the data? What does this survey show how they're preparing for this you know, a trend which continues to build?

James Redgrave: Yeah to Cuan's point earlier, democratization is a big driver of product innovation and, data management and data analysis is a huge part of that in private markets.

As we know, one of the problems there is the creation of more sort of structured, repeatable data out of unstructured information, which comes in more sort of text based or document-based forms. The industry has had problems with this for a long time. One of the questions we asked was to what extent they see emerging technologies, particularly generative AI, large language models, as a sort of facilitator of improvement here.

And we found that more than 80% of our respondents are actively exploring use cases. And the range of use cases is really quite broad from whole of portfolio sort of performance analysis to individual holding, performance to, asset class specific things like credit spreads, and private credit. There really is, sort of a wide, wide range of, technology use cases, which is driving product innovation in this space.

Liz Pfeuti: Great. There's so much going on, and it does seem that innovation is only going to be held back by the support frameworks and networks. So Cuan, coming back to you. How is State Street's supporting clients navigate these trends? Everything's happening quickly and no one's got any time to wait, so what do you do?

Cuan Coulter: So in many ways, we're doing similar things to what we do in the institutional space and in the listed space. Specifically our core products, services around fund administration. The front office solutions that we have, in particular Charles River for private markets, our Alpha data platform, which is our front-to-back, data aggregation, synthesization and delivery mechanism across front, middle and back also applies in the private market space. And then the financing solutions, if you will, all liquidity solutions that we have also apply.

But what's novel or what's potentially idiosyncratic harks back to what James was talking about. You know, one of the big challenges that has to be overcome in this asset class is, the lack of, sort of digitization of the data. So, our most valuable services to private market clients involve data extraction, data normalization tools, across all of their holdings.

The ultimate object of, for either asset owners or asset managers is to be able to have a whole portfolio view, so regardless of whether you've got public listed securities or whether you've got private assets, you should be able to see them across your entire complex, and we work hard to make sure that clients can get that holistic perspective to their portfolios.

Liz Pfeuti: So guys it sounds like there's a lot to be getting on with. State Street's got a lot to support because there's an awful lot happening in private markets, and investors don't seem like they want to wait. So thank you very much for joining me to dig into some of this. As I say, if you want to find out anymore, the survey’s online at statestreet.com.

Thank you very much for joining us and hopefully see you next year for the fifth annual Private Market survey by State Street.

¹ In the first quarter of 2025, CoreData research, on behalf of State Street, ran a global survey of nearly 500 senior executives at buyside investment institutions, including private markets specialist managers, generalist asset managers with private markets portfolios and institutional asset owners.