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There’s something about the word “private” that resonates with clients and investors. Getting down to it, there’s really no barrier to entry to public markets beyond a participant’s capital constraints.
Obviously, private markets are a definite matter and that aura of exclusivity is what draws many clients to asset classes such as private credit and equity. For advisors, there are multiple pieces of good news relating to private markets. It’s getting easier to access related assets for a broader group of clients and the concepts are easily explained.
Put simply, private markets are the investing of capital in assets that aren’t listed on traditional bond or equity bourses. The six primary private market segments are credit, equity, infrastructure, natural resources, real estate and venture capital.
With those housekeeping items out of the way, advisors can go about the business of educating clients about the benefits of private markets, of which there are many.
Private Markets Perks Galore
For decades, investors have heard about the benefits of diversification and those virtues have been extoled by the wealth management community. But for seemingly all of that time, portfolio diversification was attained through limited means and often by way of publicly listed assets.
Such avenues worked for awhile, but more recently, correlations between some asset classes that previously weren’t highly correlated have risen, putting new burden on asset allocators to find credible diversification ideas. Advisors believe private markets accomplish that objective.
“Surveyed advisors agree that private assets offer important diversification benefits,” according to Blackstone’s Advisor Pulse Summer 2025 edition. “Real assets like real estate and infrastructure have low correlation to public markets. Private credit complements public fixed income by providing higher income and reducing duration risk. Private equity returns are typically driven by revenue growth rather than multiple expansion, which we believe provides greater reliability across market environments.”
Knowing that private markets are increasingly viewed as core portfolio positions that enhance clients’ long-term capital growth and income needs, it’s not surprising that more wealth managers are looking to boost exposure to private markets as confirmed by the Blackstone chart below.
Clients Want Private Markets Exposure
Admittedly, everything that’s been mentioned here is favorable as it relates to private markets. That’s not to say the asset class is perfect – it’s not – but it has its shares of positives. Those include the fact that it’s an easy sell with clients. They want access to private credit, equity and the like and they want it yesterday.
“Most clients show interest when first introduced to private markets, drawn by potential benefits such as diversification, access to alternative return drivers, and reduced exposure to public market volatility,” adds Blackstone.
Just 3% of investors polled by the private equity giant said they’re not interested in private markets. Conversely, 91% said they’re either “very” or “somewhat” interested in non-listed investments. Bottom line: private markets are having a moment and it’s one that could prove durable because the field of prospective investors is expanding. Advisors need to be prepared.
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