What is private markets investing?
Private markets refers to the investment in the capital of privately-owned companies versus publicly-traded companies.
Public investing involves trading securities on public exchanges, providing liquidity and transparency, while private investing entails investing directly in private companies, offering the potential for high returns but with greater risk and less liquidity. Both play important roles in diversifying portfolios and achieving financial goals, appealing to investors with varying risk appetites and strategies.
Our commingled solutions help drive performance and diversification benefits to support investors' total portfolio objectives. For over 50 years, we have successfully integrated private asset funds into some of the world's largest institutional investor portfolios.
From helping pension plans close funding gaps to developing new products for banks, financial advisors and their underlying clients, we continue to create tailored solutions to help clients achieve their goals.
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.
Impact investing
Includes agriculture and timber, and mining and metals.
3 reasons to invest in private markets
What are the benefits of private markets investing?
1. INFLATION HEDGING
Private market investing can offer potential hedging benefits, particularly for select infrastructure, real estate, and natural resources strategies.
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.
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:
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?
Why choose Russell Investments for private assets?
A trusted advisor
We work with clients to capture a deep understanding of their frameworks and processes to support confident decision-making. Our strong governance culture and fiduciary mindset deliver solutions to address our client's needs and reduce the resource burden for their board and internal teams.
A-Z private markets access
Access a wide range of market opportunities including through primaries, secondaries and co-investment vehicles. We conduct detailed research to identify niche exposures within strategies like venture capital, growth and buyouts. This helps to offset fees, accelerate returns and provide additional diversification benefits.
Open architecture design
When investing in private market solutions, active management and management selection are essential. Our portfolios are designed to deliver differentiated returns and minimize downside risk, by sourcing managers with a unique strategy. As your portfolio needs change through time, we support you with the right response through commingled or fund-to-one.
50⁺
Years of experience in private markets
25
Investment
professionals
Hamilton Lane strategic partnership
Russell Investments is proud to partner with Hamilton Lane. Hamilton Lane is a specialist global private markets provider with over 30 years of experience and $805 billion in assets under management. This provides us with preferential access to their industry-leading private markets investment solutions, data-driven research and innovative technology tools. Hamilton Lane provides a large database of investment opportunities, with over $15 trillion in private markets investments monitored.