Mark Austin: An increasing number are holding higher levels of liquid assets as a “strategic risk reserve”
Pension schemes and other asset owners are adapting investment strategies and operating models to support more sophisticated portfolios, Northern Trust research finds.
The financial services firm's second annual global peer study - published today (19 May) - highlighted a continued shift toward private markets, an increased focus on liquidity through a strategic risk lens, meaningful adoption of digital assets, and growing investment in data, technology and artificial intelligence (AI).
Key findings from Northern Trust's survey of more than 180 pension funds, endowments, outsourced chief investment officers, insurers and other asset owners found that:
- Private markets were becoming more central: Some 94% of respondents reported investing in private markets (up from 86% in 2025), and private market allocations rose to 17% of the average portfolio.
- Liquidity is a priority through a risk lens: 60% of respondents said liquidity has become more important over the past year, increasingly tied to portfolio resilience and risk management.
- Digital assets are expanding: 47% reported current digital asset exposure, with adoption shaped by regulation, governance and servicing capabilities.
- Data and AI investment is rising, but data issues persist: nearly 70% cite "harnessing the power of AI" as a top operational challenge, while 57% cite data integration and accuracy as key obstacles.
Among UK respondents, some 86% of respondents said they currently invest in private markets. Of those, 83% invested in real estate, 67% in private equity and 67% invest in natural resources and energy.
And some 57% said liquidity has become more important to their investment strategy – with changes to risk strategy, the current interest rate environment and liability-driven investing being the key reasons given for the increase in importance.
Northern Trust EMEA pensions and insurance executive Mark Austin said an increasing number of respondents said they were holding higher levels of liquid assets as a "strategic risk reserve" – a move partly driven by increased geopolitical uncertainty but also by the need to hold additional liquidity to meet the capital calls demanded by higher allocations to private market assets.
Some 50% of UK respondents also reported that they invested, either directly or indirectly, in digital assets. Those not investing in digital assets cited risk tolerance and lack of regulatory clarity among the reasons why.
Austin said the increased penetration of digital assets was down to two main factors. He said: "We see investors having a small allocation to those digital assets as a potential investment, but the other aspect is that they are looking at the technology that underpins digital assets with its potential to improve, automate and drive costs out of what they do as a business."
Asset owners were also increasing their spending on technology – with 57% of UK respondents likely to spend more on compliance and regulatory reporting technology and 36% likely to spend more on trading, investment diligence and liquidity management technology.
The research also found some 64% of UK asset owners were looking to increase technology adoption to make operational procedures more efficient.
