Growing demand for private equity exposure from pension funds and sovereign wealth funds is expected to go some way to plug the gap left by a drop-off in allocations from insurance and financial institutions, according to research from Morgan Stanley.

The report from Morgan Stanley entitled "Global Asset Managers: How Asset Managers Grow in a Low Return World" forecasts steady increase in pension fund allocations from 5.5% in 2010 to 6% by 2014, representing an additional $270bn of private equity allocations in that period. The bank also predicted that sovereign wealth fund allocations would rise from 3.7% in 2010 to 4% by 2014, implying an additional $100bn of private equity allocations.