Private Markets: A Key Driver of Long-Term Portfolio Performance
Private markets, including private equity, venture capital, private credit, and real estate, have become indispensable components of modern investment portfolios. As the economic environment becomes more volatile and uncertain, private assets provide unique opportunities that public markets often struggle to match. We are among the select few integrating private markets into our portfolio strategies to offer clients enhanced diversification and long-term growth potential.
Why Private Markets?
1. Greater Diversification and Resilience
Private markets offer access to investments that are less correlated with public markets, allowing investors to diversify beyond traditional asset classes. This diversification reduces portfolio volatility and provides a buffer against market downturns. By investing in private companies, investors can capture value early in the growth cycle, long before these companies are available on public exchanges.
2. Access to Exclusive Opportunities
The majority of businesses worldwide are privately owned, and many of the most promising and innovative companies choose to stay private longer. This provides private market investors access to a broader universe of opportunities, including high-growth sectors such as technology, healthcare, and infrastructure. Investors are able to participate in the full growth potential of these companies, something that public investors often miss.
3. Long-Term Value Creation
One of the distinguishing characteristics of private markets is the longer investment horizon, which allows for a focus on sustainable value creation rather than short-term performance. In private equity, managers actively work to improve operational efficiencies, drive growth, and execute strategic initiatives that can significantly increase the value of portfolio companies. This hands-on approach aligns the interests of investors and management, resulting in stronger governance and performance over time.
4. Higher Risk-Adjusted Returns
Historically, private market investments, particularly private equity, have consistently outperformed public market investments. By focusing on operational improvements and long-term growth, private equity managers are able to deliver higher risk-adjusted returns. This makes private markets especially attractive for investors seeking stability and growth in a challenging economic environment.
Why We Lead in Private Market Integration
We have embraced private markets as a core element of our investment strategy, offering our clients unparalleled access and expertise:
- Deep Industry Relationships
Our extensive network with top-tier private market managers allows us to provide clients access to exclusive investment opportunities that are often closed to new investors. This positions our clients to benefit from well-curated investments across multiple sectors and geographies, ensuring a globally diversified private market portfolio.
- Customized Portfolio Solutions
We offer tailored private market strategies that align with each client’s financial goals, risk tolerance, and liquidity needs. Our bespoke approach allows us to build portfolios that capitalize on high-growth opportunities while providing diversification and downside protection.
- Focus on Long-Term Performance
Private markets require patience, but those willing to commit to the long term can reap significant rewards. Over time, private market investments have consistently outperformed during and after economic downturns, offering resilience when public markets falter.
A Growing Trend Among Sophisticated Investors
Private markets are no longer niche; they have become a critical component of institutional portfolios. Sophisticated investors—including prestigious university endowments and leading asset managers—have steadily increased their allocations to private assets, with endowments often dedicating more than 30% of their portfolios to private markets, and top asset managers allocating over 20%. This trend underscores the importance of private assets in delivering superior long-term returns.
As private markets continue to grow and evolve, they will play an increasingly important role in shaping the future of investment portfolios. By partnering with leading managers and leveraging our deep expertise, we provide our clients with the tools to navigate and succeed in this expanding asset class.
