For decades, private markets have been a cornerstone of institutional portfolios, prized for their potential to enhance returns, lower volatility and provide critical diversification benefits.
With today’s volatile markets — where uncertainty looms larger than ever — understanding and accessing private markets is no longer just a nice-to-have for savvy investors; it is essential.
Why private markets matter more than ever
Historically, the risk-return-correlation characteristics of private markets have contributed significantly to portfolio efficiency.
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With higher returns, lower correlation to public markets and reduced volatility, private assets have helped institutional portfolios shift their efficient frontier upward, increasing portfolio risk-adjusted returns.
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Today, the role of private markets is even more critical. In an environment marked by geopolitical tensions, rising tariffs, persistent inflation and fluctuating interest rates, uncertainty is at a historic high.
To put it in perspective: The most recent edition of the Federal Reserve’s Beige Book mentioned “uncertainty” 80 times — more than twice the frequency seen during the height of the pandemic or the 2008 global financial crisis.
In such periods, the portfolio’s best defense isn’t market timing or chasing yield; it’s diversification.
True diversification — the kind that spans multiple asset classes beyond just stocks, bonds and commodities — is the only “free lunch” available to investors.
Private markets open new vectors of diversification, offering exposure to different return drivers and insulating portfolios against synchronized sell-offs across public markets.
Capturing the broader opportunity set
One often overlooked advantage of private markets is the sheer breadth of opportunities. Most U.S. companies are privately owned, and 76% of all companies with more than $100 million in revenue remain private, according to February 2025 data from PitchBook.
Investing solely in public markets means ignoring the majority of the economic activity and innovation happening outside the public eye.
Moreover, companies are staying private longer. According to data from the University of Florida, from 1990 to 2024, there has been a 66% decline in the average number of companies going public annually.
According to reports, a recent OpenAI funding round, for instance, raised more capital than all U.S. IPOs combined in 2024. The public markets are no longer the gateway to the most dynamic growth stories; private markets are.
Institutions recognize this. The trend among pension funds, endowments and sovereign wealth funds is toward ever-higher allocations to private markets.
In general, the larger and the more sophisticated the institution, the greater the percentage of its portfolio dedicated to private assets. They understand that private markets aren’t an alternative; they are essential.
The traditional barriers for individuals
Despite the clear benefits, accessing private markets has historically been difficult for individual investors. Successful investing in private markets has required:
- Manager selection expertise. Identifying top-tier managers is crucial, given the wide — multiples wider than equivalent public market strategies — dispersion of returns between top and bottom quartile performers.
- Robust deal flow. Seeing a large volume of opportunities increases the ability to be selective and identify the best deals.
- Institutional-quality due diligence. Applying rigorous, experience-based underwriting and selection processes to filter investments.
Beyond investment expertise, structural barriers like high minimums, complex subscription documents, intricate tax reporting (think Schedule K-1s) and stringent eligibility requirements kept most individuals on the sidelines.
The evolution: Private markets made accessible
Fortunately, the landscape has changed. Innovative fund structures, such as interval and tender offer funds, now enable broad access to private markets through user-friendly formats.
Regulatory developments have further expanded opportunities. Notably, at SEC Speaks on May 19, 2025, SEC Chairman Paul Atkins announced that the agency will no longer enforce the informal staff position that previously required registered funds with more than 15% of their assets in private alternative funds to restrict offerings to accredited investors and above.
This position change removes a significant barrier that has historically limited retail investors’ ability to access high-quality private market funds within the investor-friendly structure of evergreen funds.
Key features of evergreen vehicles:
- Ticker-based subscription. No subscription documents; you can invest as easily as buying a mutual fund
- Broad eligibility. All clients can participate
- Low minimums. The financial barrier to entry is reduced
- Quarterly liquidity. Allows for portfolio rebalancing
- Simplified tax reporting. 1099 tax forms instead of complicated K-1s
These innovations have democratized access without diluting investment quality, creating a compelling bridge between institutional-grade private investments and individual wealth portfolios in an easy-to-access implementation.
Going beyond
Private-markets demand in the wealth market is booming. This has been fueled by the newfound ability of registered investment advisers (RIAs) to provide clients with a broader range of offerings and capabilities that target the everyday investor — an important segment of the market.
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However, access alone isn’t enough. Small and midsize RIAs require support and practice management solutions to support their private markets implementation. This includes:
- RIA partnership programs. Institutional-quality private markets access tailored for advisers and high-net-worth (HNW) clients. This includes adjacent and complementary products such as co-investments and hedge fund solutions.
- Portfolio construction support. Access to digital portfolio construction tools designed to address the key question: How do private investments integrate into a liquid portfolio framework?
- Private markets education platform. Digital education content for clients and advisers, including CE-credit eligible courses.
- Research access. Insights from public and private market managers, empowering advisers and investors with deep diligence and actionable intelligence.
Conclusion
Private markets are no longer just the domain of institutions. Today, sophisticated individual investors can — and should — embrace them to enhance returns, diversify risk and strengthen portfolio resilience against rising uncertainty.
The opportunity is clear: You can gain exposure to a broader swath of the economy, access differentiated returns and fortify portfolios for a more uncertain present and unpredictable future.
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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
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