The landscape of private markets has undergone a profound transformation over recent decades, evolving from a domain traditionally reserved for institutional investors to a sector that is now accessible to a broader range of sophisticated investors. This evolution has not only expanded the opportunity set for sophisticated investors but also redefined how portfolios are constructed.
“Everything that’s not really public,” is how Martin Randall, Head of Private Markets at LGT Wealth Management, succinctly describes the realm of alternatives. “That may sound a little bit simplistic, but I think alternatives and private markets can appear to be a little bit overcomplicated.” He points to private equity, private debt, venture capital, and even unlisted infrastructure and real estate as core components of this universe—assets that are integral to daily life but not always available on public exchanges.
“Private market allocations now account for about 20% of assets under advice at LGT Wealth Management.”
The growth in private market allocations has been significant. “Private market allocations now account for about 20% of assets under advice at LGT Wealth Management” Randall notes. This acceleration has improved access for high net worth, ultra-high net worth, family offices, and smaller institutions to this asset class. “What has historically been a domain of institutional investors globally—sovereign wealth funds, pension funds—is now accessible to private clients more broadly.”
A key innovation fuelling is the emergence of evergreen or open-end private market vehicles. “Historically, the private markets universe has been accessed via a closed-end structure,” Randall explains. The translation that’s occurred over the past 10 to 15 years is we now have open-end or evergreen vehicles in the private markets which makes them more accessible to the way LGT Wealth Management builds portfolios. This shift has enabled private clients to allocate capital more flexibly and efficiently.
Mario Giannini, Co-Executive Chair of Hamilton Lane cautions that investors must approach private markets with a long-term mindset, recognising that liquidity is fundamentally different from public markets. Traditionally, people want liquidity and they want it so they can make their biggest mistakes ie they want to buy and sell when they shouldn’t.
“If you look at over the last 25 years, alternatives - whether in equity, credit, real estate, all of the different alternative classes - have outperformed the publics."
Despite these challenges, the performance of private markets has been compelling. “If you look at over the last 25 years, alternatives—whether in equity, credit, real estate, all of the different alternative classes—have outperformed public markets,” Giannini states. “If you have a set of assets that’s been outperforming for this period of time, people want access to those and exposure in their portfolios.”
The evolution of private markets has also been marked by the democratisation of access. “The retail high net worth space has become a bigger player in the last few years,” Giannini acknowledges, though he notes that institutional investors still dominate the market. “Structures and ways of investing are evolving...the kind of deal that is interesting to a sovereign wealth fund is the same kind of deal that is going into the retail evergreen space.”
Valuation remains a topic of debate, but both Giannini and Randall emphasise the robustness of private market practices. “Private market practitioners are used to valuing assets, and they’ve done a pretty good job of it for 30 years,” says Giannini. Randall adds, “The practitioners of private markets across different sub-asset classes…the interesting thing is they’re still valuing assets as you would do, at least from an analyst perspective, as a public market analyst would do. The difference is that you just don’t have that sentiment swing you see on stock exchanges.”
Looking ahead, the breadth of opportunity in private markets continues to expand “as private markets have grown, so too has the opportunity set.” More people are aware of private markets as a way to exit a deal or a way to get financing. And so they’ve kind of grown in lockstep—that is the amount of capital and the amount of opportunities,” Giannini reflects. Randall concurs, highlighting the increasing importance of private debt and unlisted infrastructure as compelling areas for portfolio allocation.
Ultimately, the evolution of private markets is about unlocking opportunities—broadening access, enhancing portfolio diversification, and delivering performance in a world where the boundaries between public and private capital are increasingly blurred. As Giannini concludes, “If you’re going to be in alternatives, pick your allocation amount, put it in and just stay with it…”.
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