Allianz Global Investors is aiming to double its private markets assets under management (AUM) over the next decade.
The firm’s chief executive officer Tobias Pross said at the Bloomberg Invest conference in Hong Kong on Wednesday that he aims to reach up to $200bn in private markets AUM.
AllianzGI currently manages over $610bn of assets, of which around $110bn are invested in private markets, according to Pross.
Asset management firms have been pushing to manage more private assets for clients as profits from managing public assets get squeezed by low-cost passive funds.
“Private markets is a very important venture for us,” Pross said. “If you look at growth markets, the private market piece and creating accessibility to retail customers will be a huge thing.”
“It will deliver less correlated income compared with the fixed income, equity or multi asset and the beauty is also, from a duration perspective, it’s very often in line with the liability management you have as a retail investor.”
He believes that over the next decade, the lines between public and private assets “will start to blur”, however that is not to say public markets won’t still play an important role for investor portfolios.
“Public markets will play absolutely the most important role, and private is not for everybody,” he said. “Retail investors maybe don’t want to live with semi liquidities, so I truly believe you need both.”
While Pross said he has ambitions to grow the firm’s private markets business organically, AllianzGI’s parent Allianz SE is in talks to acquire Danish credit firm Capital Four, according to a report from Bloomberg.
On investment opportunities
As investors globally continue to reassess their US exposure, Pross said the marginal dollar of investment is moving towards both Asia and Europe.
But between the two regions, he is more bullish on the European equity markets given how cheap it is on a price-to-earnings ratio basis compared with US equities.
“I believe you will see with price earnings revisions, that Europe going forward is a very good place. It’s very cheap, and it is more stable than you think,” he said. “Europe always needs a crisis to evolve and get better.”
He pointed to European announcements to increase its defence and infrastructure stimulus after tariffs were announced in April.
When it comes to choosing between fixed income and equities, Pross said he prefers equities “because it is where value creation happens”.
“If you think about pension schemes globally, they are always underweighted in equities because the regulation says ‘you need to be safe and you need to generate income’ but the value creation from a capital markets perspective happens at companies where you invest into, and this is mostly equity.”
