For many years, private markets have been a vital part of big institutional investors’ portfolios. They offer higher returns, lower risk, and important diversification benefits that public markets often cannot provide.
Why Private Markets Matter More Now
In today’s unstable financial world, understanding and investing in private markets is essential. The current environment is full of uncertainty due to geopolitical tensions, rising tariffs, inflation, and changing interest rates. The Federal Reserve’s latest Beige Book mentioned “uncertainty” 80 times—more than twice as often as during the pandemic or the 2008 financial crisis.
In times like these, smart investors don’t rely on timing the market or chasing high yields. Instead, they focus on diversification. True diversification means spreading investments across many types of assets—not just stocks, bonds, and commodities. Private markets provide access to new types of investments that behave differently from public markets, helping protect portfolios from widespread sell-offs.
Private Markets Offer More Opportunities
Most U.S. companies are private. In fact, 76% of companies with revenues over $100 million are not publicly traded, according to PitchBook data from February 2025. This means investing only in public stocks misses most of the economy’s growth and innovation.
Also, companies are staying private longer. From 1990 to 2024, the number of companies going public each year dropped by 66%, according to the University of Florida. For example, OpenAI’s recent funding round raised more money than all U.S. IPOs combined in 2024. Private markets now hold many of the most exciting growth opportunities.
Large institutions like pension funds and sovereign wealth funds are increasing their private market investments. They see private assets not as an alternative but as a necessary part of a strong portfolio.
Challenges for Individual Investors
Despite the benefits, private markets have been hard for individuals to access. Investing successfully requires:
- Choosing top managers carefully, since returns vary widely.
- Access to many deals to pick the best ones.
- Strong due diligence to evaluate investments properly.
Besides expertise, high minimum investments, complex paperwork, difficult tax reporting (like Schedule K-1 forms), and strict eligibility rules have kept most individual investors out.
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