Private markets used to be the domain of endowments, pension funds, and sovereign wealth funds. That's changed. While individual investors may now have access to them, the question is whether they are approaching them the right way.
The Market You Can See Is Only Part of the Market
For decades, building a diversified portfolio meant choosing among publicly traded stocks and bonds. That framework made sense when most significant companies were accessible on a public exchange. It makes less sense today.
The number of publicly listed companies in the U.S. has declined sharply over the past 25 years. In fact, globally, only 13% of companies with over $100 million in revenue are publicly traded.1 Additionally, those that do go public are waiting longer to do so, which has them arriving on the public markets larger, more mature, and with much of their early growth already behind them. The result is that a growing portion of the economy's most dynamic companies (and much of their value creation) may be occurring entirely in private hands. If your portfolio only holds public securities, you're working with an increasingly incomplete picture.
Four Ways Private Markets Can Strengthen a Portfolio
Accessing private markets isn't a single decision, it's a set of distinct exposures, each serving a different purpose in a well-constructed portfolio.
Private Credit seeks to fill a gap left by traditional banks, offering floating-rate, senior-secured lending with yield premiums above public bonds and low correlation to equity markets. This can be a compelling complement to conventional fixed income.
Private Equity may provide access to company growth that increasingly never reaches a public exchange. Institutional investors including pensions, endowments, and sovereign wealth funds have allocated to this space for decades precisely because of its potential to enhance long-term returns and portfolio diversification.
Private Infrastructure investments such as data and power centers, clean energy, and supply chain support could generate stable, inflation-linked cash flows with limited sensitivity to public market swings. For clients focused on income and capital preservation over time, it's a meaningful diversifier.
Private Real Estate, distinct from publicly traded REITs, is driven by underlying property fundamentals rather than daily market sentiment, offering income, inflation sensitivity, and a return profile that behaves differently from both stocks and bonds.
Together, these exposures can reduce portfolio volatility, improve risk-adjusted returns, and provide access to parts of the economy that may simply not be available through a traditional 60/40 allocation.
Access Is Growing…But Access Isn't the Same as Expertise
Regulatory changes and new fund structures have made private markets more accessible to individual investors than ever before. More firms have products available to them to discuss and the conversation has moved from institutional boardrooms into mainstream wealth management. That shift comes with both real opportunity and real noise.
Illiquidity is real. The complexity of these investments and their fund structures is real. Manager selection matters enormously here in a way it simply doesn't in public markets, and choosing the wrong manager doesn't just mean modest underperformance, it can mean meaningful loss.
What Sets Summit Apart
Our approach starts with institutional quality due diligence. Before any strategy appears on our approved platform, it goes through a rigorous evaluation including manager track record, team stability, fee structure, alignment of interests, and how the strategy actually fits within a broader portfolio. We don't add names or fund managers to fill a lineup.
But vetting the investment is only half the work. The other half is the education to ensure that when our client holds a private markets allocation, they understand what they own, why they own it, and what to expect. Liquidity timelines, capital call mechanics, distribution patterns aren't footnotes of a meeting to us. They're central to whether a client stays invested through the full cycle and actually captures the return they came for.
A lot of firms are starting to talk about private markets. Here at Summit Wealth Group, we're building the infrastructure to do it right. If you'd like to discuss how alternatives may fit within your portfolio, bring it up with your advisor. That's exactly the conversation we're here to have.
1 Source: Hamilton Lane Capital IQ (February 2024)