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What are private markets?

Private markets refers to the investment in the capital of privately-owned companies versus publicly traded companies.

There are six main asset classes within private markets:

Private credit

Includes private lending and special situations

Private equity

Includes buyouts, secondaries, and growth equity

Venture capital

Includes early- and late-stage financing

Private infrastructure

Includes brownfield investments and greenfield investments

Private real estate

Includes core, value-added and opportunistic

Natural resources

Includes agriculture and timber, and mining and metals

Private Markets Survey

How are managers tackling value creation in a challenging and uncertain market environment?

We surveyed 32 firms, representing $1.6 trillion in total assets, from across the universe of private markets strategies on key investment themes and where they are finding the greatest opportunities and risks.

3 reasons to invest in private markets

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1. Inflation hedging

Private market investing can offer potential inflation hedging benefits, particularly for select infrastructure, real estate and natural resources strategies.

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2. Reduced volatility

Valuations for private assets typically happen less frequently than for public assets, usually quarterly, so they don't tend to experience the same market volatility as public markets.

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3. Return potential

Private capital markets have historically outperformed public assets over the long term, tapping into non-economic risk premia (e.g., illiquidity premium).1

Why private markets?

Private market investments provide a range of exposures depending on the risk/return, cash flow and correlation characteristics investors are seeking. Therefore, it is important to consider the role of private markets within your total portfolio:

Learn more about how private assets can help

How do private markets work in portfolios?

New return sources

The investable opportunity set in private markets is substantially larger than in public market. There are approximately 95,000 private companies with over $100 million in annual revenues. In contrast, there are only 10,000 public companies of the same size. This makes the investable universe of private companies 850% larger than that of public companies.

Income supply

Private credit can help generate income from private loans, secured by a company's cash flow or assets. In addition, loans are typically floating rate, which can benefit investors in periods of rising interest rates. Private real estate also expands income opportunities through rental income.

Reduced risks from diversification

Diversification in private assets can help manage downside risk and reduce overall volatility.

Provide inflation protection

Most infrastructure assets have an explicit link to inflation through regulation, concession agreements or contracts. In real estate, cash flows from periodically resetting contractual rent payments adjust to rising price levels. Also in an inflationary environment, replacement costs increase, therefore boosting the value of existing buildings.

Investing in private markets has traditionally offered higher potential returns with lower volatility than that experienced by more traditional listed asset classes.

Source: Russell Investments Strategic Planning Forecasts, March 2022

How big is the private markets universe?



Growth in the number of funds over the last 20 years3



Private Markets Asset Under Management H1 20212



Commitments to Private Markets over the last 50 years4

How are private markets being used to solve investor challenges?

Institutional investors have some large structural and socio-economic challenges that could impact their portfolio beyond simply meeting a return target. There is growing inflation impacts from 'slobalization' and pressure on supply situations5 hampered from global pandemics and geopolitical situations. Private assets offer opportunities to support active participation in these mega trends.

Decarbonization, clean energy and the power to impact are core community-led themes organizations must navigate. Private assets can be used to help provide strategies to address these challenges in uncertain times.

Latest insights

Read the latest from our experts on private markets

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Lisa Schneider

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Lisa Schneider, CFA

Managing Director,
Head of Client Solutions

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