Introduction to Private Markets

Key takeaways

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

• Private markets are an expanding segment of alternative investments that are becoming a core component of modern portfolios.
• These strategies offer differentiated return potential driven by illiquidity and complexity premiums but require a long-term investment horizon and careful manager selection.
• Structural shifts, including more companies staying private and reduced bank lending, are driving increased opportunity and growth in private markets.

What are private markets?

In the context of alternative investments, private markets are distinguished by the fact that they are not listed and traded on public exchanges. Once harder to access, the evolution of private markets may present a new set of opportunities for investment portfolios.

In recent years, product innovation has allowed more investors to allocate solutions ranging from private equity and private credit to real estate and infrastructure. Private markets are overall moving from a niche allocation used primarily by large institutions to becoming a core component of modern portfolio construction.

Core exposures to consider are:

• Private equity: Investments in private companies, including buyouts, growth equity and venture capital.
• Private credit: Direct lending and other non-bank lending strategies to private companies and an increasing number of public companies seeking alternative capital sources.
• Real estate (debt or equity): Strategies focused on the acquisition, management and/or disposal of real estate properties to generate returns.
• Infrastructure: Investment in the facilities, services, and physical systems considered essential to everyday life and economic productivity.

What are the key differentiators in private markets?

Private markets are not traded on a public exchange like stocks and bonds, although they can now be accessed through non-traded, registered fund vehicles. Private investments typically prioritize long-term value creation over quarterly results.

Private market investing happens over a longer time horizon. These assets are generally less liquid than those on public markets, meaning they take more time or are more difficult to sell; by contrast, publicly traded mutual funds are designed to provide daily liquidity. In return for this lower liquidity, investors have historically been able to expect higher returns – this is commonly referred to as “illiquidity premium.”

Another differentiator in private markets is complexity. Success in private markets depends on specialized skills and experience. The best managers know how to uncover unique opportunities and navigate complex investments to drive potential returns, which makes manager selection critical.

Why consider private markets?

1. Expanded opportunity set
   Private companies are a growing part of the economy, offering wealth creation opportunities as more companies stay private for longer.
2. Differentiated return potential
   Private markets have historically delivered attractive risk-adjusted returns and differentiated investment opportunities. These return differentials are often attributed to illiquidity and complexity premiums.
3. New access points
   Ten years ago, private markets were mostly only available to institutional and high-net-worth investors. Industry innovation and better data and transparency are making private markets more accessible to individual investors, whether through evergreen products or whole portfolio managed solutions and services that blend public and private markets investments in a single account.

What is driving growth in private markets?

Long-term trends continue to support the case for private markets.

Risk has become increasingly concentrated in public markets as large indexes are dominated by growth-oriented technology stocks. Among the number of total listed companies, the 20 largest names now represent greater than 30% of global stock market capitalization versus just under 14% in 2015. (See Exhibit 1).

Exhibit 1: Public stocks have become increasingly concentrated

Capital formation increasingly takes place in private markets – today, 81% of companies with revenues over $100m are private. With banks reducing lending and public markets shrinking, private capital has become essential to funding business investment, innovation and economic growth. As a result, investors are rethinking traditional exposures and exploring how private markets can expand their opportunity set.

Source: S&P Capital IQ, BlackRock. Represents the number of global companies with annual revenues greater than $100 million. Data are based on availability as of April 22, 2026.

Exhibit 2: A growing opportunity set

Exhibit 3: Banks retreating from credit markets has created private financing opportunities

Exhibit 4: Traditional portfolios are evolving.

With private markets potentially offering a compelling risk/return profile, more investors may seek to allocate to private markets alongside traditional stocks and bonds.

How to access private markets

Recently, professional investors have expanded access to private market investments primarily through non-traded registered funds, which offer relatively low investment minimums and potentially more periodic liquidity. This has allowed more investors to tap into private markets with investments that are easy to implement.

Key considerations for private market investments:

1. Manager selection
   There can be dispersion in returns among private market strategies. To pick a manager you trust, consider industry expertise, a demonstrated track record, scale, fees and reporting transparency.

2. Access points
   Product innovation has allowed individual investors greater access to private markets. New registered fund structures offer more transparency and operational efficiency than their predecessors, however, operational and market risk is still present and should be taken into consideration.

3. Liquidity needs
   While new structures may offer limited liquidity and shorter lock-ups than traditional funds, private market investments are designed to focus on a longer time horizon for value creation. Consider your spending needs and investment period when allocating to private markets.

Private markets are reshaping how investors think about portfolio construction. As access continues to improve, private equity, credit, infrastructure and real estate are playing a growing role alongside traditional stocks and bonds. With thoughtful implementation and a long-term perspective, private markets can help expand opportunity sets and may lead to superior investment outcomes.