The surge in interest and continued allocation to private markets is no coincidence. It reflects a convergence of long-term structural shifts in the investment landscape and evolving investor preferences that are reshaping expectations around portfolio construction.​

Understanding these forces helps explain why private markets are no longer viewed as an alternative allocation, but rather as a core component of a well diversified investment strategy.

 

Structural Shifts          (Scroll left to view full table)

Systemic changes are expanding the role of private markets:		 Investor Preferences

Investors are demanding more and private markets can deliver:

Evolving Fund Structures Broaden Access
 
Evergreen funds add flexibility through lower entry hurdles, periodic liquidity windows and continuous deployment, opening private markets to a wider investor base.

Improved Returns Potential
 
Private markets may offer higher long-term returns and income than public assets. When private assets are carefully selected by a specialist manager, they can contribute to attractive risk-adjusted outcomes, particularly in low-yield environments.4

Larger Investment Opportunity Set 
 
Companies are staying private for longer, reducing the number of public listings and expanding the private market universe. Increasingly, innovation and growth occur before an Initial Public Offering (IPO) and private investing can offer exposure to these companies early on.1

Lower Volatility
 
Public market valuations are marked-to-market daily and influenced by macroeconomic news and sentiment. In contrast, private market valuations are based on long-term fundamentals such as cash flow generation, operational delivery and strategic progress. This can result in decreased volatility and a more consistent portfolio experience.

Post-Global Financial Crisis (GFC) Credit Gap
 
In the wake of the 2008 GFC, traditional bank lending contracted due to tighter regulatory frameworks such as Basel III/IV. This retrenchment has created a significant opportunity for private credit to step in by offering tailored, flexible capital solutions.2

Enhanced Diversification
 
Private markets provide access to sectors and risk premia typically unavailable in public markets.5 This can support broader portfolio diversification and introduce differentiated sources of growth and income across asset classes.

Regulatory Tailwinds
 
Recent reforms across the U.S., UK and Europe are broadening access to private markets. The U.S. SEC has dropped the 15% cap on private assets in closed-end funds, boosting retail inclusion. Europe’s ELTIF 2.0 and the UK’s LTAF likewise widen the investor pool, while Solvency II continues to steer insurer capital towards illiquid assets such as private credit and infrastructure.

Less Correlation to Public Markets
 
Periods of positive correlation between public equities and bonds, such as in 2022, have challenged the effectiveness of traditional 60/40 portfolios. In contrast, private markets can offer access to return drivers that are less correlated with public markets, potentially enhancing diversification and improving overall portfolio resilience.

Global Infrastructure Demand 
 
With government finances under strain,3 private capital is essential in meeting the infrastructure demands of secular growth trends, notably in decarbonisation, digitalisation and urbanising populations across the world.

Capital with Purpose 
 
Private market investments increasingly enable investors to align their capital with broader objectives, including sustainability and the energy transition. Direct engagement with portfolio companies can help support long-term impact, while also aiming to deliver financial returns.6

 

1. https://indexes.morningstar.com/insights/analysis/blt81d5614b4c2ccd2b/unicorns-and-the-growth-of-private-markets 
2. https://www.professionalpensions.com/sponsored/4148833/lgim-pp-23-bank-retrenchment-mean-private-credit-investors 
3. https://www.imf.org/en/Blogs/Articles/2025/04/23/rising-global-debt-requires-countries-to-put-their-fiscal-house-in-order 
4. https://www.preqin.com/insights/research/blogs/navigating-the-future-of-private-capital-performance 
5. https://www.wtwco.com/en-nl/insights/2025/04/private-equity-a-valuable-tool-for-portfolio-diversification 
6. https://www.privateequityinternational.com/cvc-operations-heads-three-tips-for-value-creation-in-evolving-markets/ 

 

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