In an environment where expectations for future returns across most asset classes are much lower than in the recent past, investors are increasingly turning to private markets to boost their expected portfolio returns. As a result, we have seen investors' private markets allocations steadily increasing year-on-year across both private debt and private equity. Many of these investors are making their first allocations to the asset class; lack of experience in this sphere leaves them prone to...

Building a private markets portfolio is very different from building a public equity or fixed income portfolio. Many of the portfolio management tools available across traditional asset classes are not readily available in private equity/debt portfolio management due to illiquidity both in terms of the nature of investment instruments and funds being closed-ended vehicles with capital subject to long lock-up periods. Additionally, access to the most sought-after managers is often constrained...

The diversification offered across private markets’ vintages, strategies, asset classes, geographies, and instruments offer structural premiums, but a hyper-diversified private markets solution across multiple funds and managers, and therefore across numerous underlying asset holdings provides a significant reduction in defaults, significantly increasing the premium offered compared to public markets. It is in the blend, typically utilising two to four mid-market specialists in their field,...