For instance, private equity has consistently outperformed public markets over the past quarter‑century, demonstrating a durable pattern of long‑term relative outperformance.2 By limiting themselves to public markets, investors may risk reducing their ability to access investments in large, growing, and highly successful businesses. Investments in private market assets have long been utilized by large institutions for their potential portfolio-enhancing attributes. With the advent of new structures that may be better suited to individuals, the private markets represent an investment opportunity that continues to grow at a rapid pace.
Historical Risk & Return since 20153
Past performance is not indicative of future results. There can be no assurance that historical trends will continue.
The private domain is larger than most may realize. So too are the businesses within it — in fact, approximately 81% of US companies that generate $100 million or more in annual revenues are private.4 These companies utilize private capital markets to secure the funding they need to operate and grow their businesses, which can create investment opportunities.
As private capital markets have grown steadily over time, many high-quality companies have chosen to stay private for longer or even go from public to private. Conversely, public markets have witnessed steady delistings globally, while the number of US-listed companies has remained relatively flat over the last decade.
Public markets are often swayed by short-term sentiments and quarterly earnings pressures. The market risk that public investments are exposed to can cause meaningful changes in valuations, even if the fundamentals of the underlying company have not changed. Private markets operate on a longer horizon, affording managers flexibility to execute on strategies that may take time to scale. The buy-and-hold approach employed by most private market investments creates potential opportunities for differentiated performance and increased portfolio stability.
Investments in private market assets are managed by experienced fund managers who tend to have access to information beyond what would be available in public markets, and in some cases have the ability to effectuate change through control of the companies they invest in. The best private asset managers are not only experienced in identifying investments with return potential, but also in conducting extensive due diligence and actively managing their portfolios — approaches that are designed to pursue elements of capital preservation that may differ from what is typically available in public markets
Although private market investments are less liquid relative to public ones, investors are typically compensated for it in the form of an illiquidity premium. Historical performance suggests that these assets do not outperform public markets simply because they are illiquid; rather, illiquid private‑market strategies have tended to exhibit attractive risk‑return characteristics that compensate investors for accepting reduced liquidity.6
While private markets assets themselves may be considered illiquid, advancements in the fund structures that hold them have allowed investors to allocate to these strategies with periodic opportunities for liquidity, depending on the vehicle
The upward trajectory isn’t a fleeting trend. Private market assets under management are expected to reach more than $30 trillion by the end of 2030, up from $10 trillion just ten years ago, thanks to several catalysts.7
Companies today appear to be choosing to stay private, in many cases, because they can afford to. An influx of patient capital (and capital providers) has enabled businesses to access financing without opening their proverbial doors to public investors. It’s a movement that not only enlarges the pool of high-quality assets but also underscores the growing recognition of private market benefits.
Public markets are particularly susceptible to macroeconomic shifts and geopolitical events. Recently, persistent inflation and rising interest rates have fueled uncertainty and, in turn, volatility. We believe investors are likely to continue allocating funds to private assets, which are typically less impacted by short-term factors as a result of less frequent valuations and longer investment horizons.
Private markets are no longer exclusive to the ultra-wealthy or large institutions. Technological advancements, innovative financial products, and digital platforms are bridging the gap between individual investors and private market opportunities. This democratized access means broader investor participation and a pathway to further growth.
Over the next few decades, $84 trillion of wealth is projected to change hands.8 As the largest wealth shift in history unfolds, there could be a noticeable change in investment philosophies. Younger investors, often more aware of and open to alternative investments, are showing a keen interest in diversifying beyond traditional public assets.
Almost 3 in 4 people between the ages of 21 and 42 do not believe it is possible to achieve above-average returns solely through stocks and bonds. Moreover, this cohort of younger investors allocates three times more funds to alternative investments than older generations do.9
Average portfolio allocation8
Young investor portfolios heavily overweight alternatives compared to older generations.
Diversification and asset allocation does not guarantee a profit or protect against a loss in a declining financial market.
Institutional investors have long utilized private markets as a core allocation for many purposes, seeking improved diversification, increased predictability, and reduced volatility — all of which are common objectives of individual investors as well. However, individual portfolios average less than 5% allocation to private markets, compared to 25% and 55% for pensions and endowments, respectively.10,11 By maintaining suboptimal allocations to alternatives, individual investors may be limiting their ability to benefit from the historically observed diversification and volatility‑mitigating properties associated with private markets.
One of the primary reasons stems from access. Historically, private markets were the exclusive territory of institutional investors and ultra-high net worth individuals, as they required significant capital, specialized knowledge, and the right connections to enter. The very structure of legacy private market investments, with their high minimum investment thresholds and longer lock-up periods, made them less accessible to the average individual investor.
Private markets aren’t a luxury anymore; they’re becoming a staple for investor portfolios. Considering their historical track record, sidelining alternative investments could mean overlooking tools that may help investors pursue their objectives. Now, more than ever, integrating private markets into one’s investment strategy isn’t an exotic venture — it’s a core allocation that may support long‑term goals.
Endnotes
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Important information
Unless otherwise noted the Report Date referenced herein is as of November 30. 2025.
Past performance is not a guarantee of future results.
Assets Under Management (“AUM”) refers to the assets that we manage and is generally equal to the sum of (i) net asset value (“NAV”); (ii) drawn and undrawn debt; (iii) uncalled capital commitments; (iv) total managed assets for certain Credit and Real Assets products; and (v) par value of collateral for collateralized loan obligations (“CLOs”) and other securitizations.
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