Private Markets
Understanding private markets in a long-term portfolio
Private markets can broaden a portfolio’s opportunity set, but their illiquidity and complexity demand careful sizing.
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Private equity, private credit, infrastructure and real estate have become a larger part of the investment landscape. For suitable investors, they may offer exposure to companies and assets that are not available through public markets.
The trade-off of illiquidity
Capital committed to private funds is typically locked up for many years. Investors cannot usually sell on demand, and capital is called and returned on the manager’s timetable rather than the investor’s.
Sizing and pacing
Because commitments are drawn over time, building a private-market allocation requires planning. Committing steadily across several years can help diversify by vintage and reduce reliance on any single period.
The question is not whether private markets are attractive, but whether they are appropriate for a particular investor.
- Confirm eligibility and suitability
- Plan for capital calls from liquid resources
- Understand fee structures fully
- Assess manager alignment and governance
Private-market investments carry significant risks, including the possible loss of all capital invested, and are not suitable for every investor.
