How has investing in private markets evolved?

Private companies have become an outsized driver of wealth creation in today's economy, yet the adoption of private market investments remains in its early stages.

Until recently, all but the wealthiest individuals have been shut out of most private market investments. Fortunately, structural innovation is occurring at a remarkable pace, and some of the world's most venerable firms are now offering a new generation of products to a broader swath of investors. Many of these products seek to offer intermittent liquidity, lower investment minimums, and 1099 tax reporting, to simplify and democratize access to private markets.

Financial professionals have traditionally used liquid mutual funds and ETFs to give their clients exposure to select private markets such as real estate and commodities. However, a new crop of products has emerged across a larger spectrum of private markets, including non-tradable REITs, interval funds, and tender offer funds. These innovations are allowing more investors to tap into areas of the market that had formerly been out of reach.

In a recent survey by Cerulli Associates, financial advisors are taking advantage of these new opportunities under expanding their allocations to alternatives. Private equity, private credit, and infrastructure are among the asset classes that are expected to receive the greatest inflows in coming years in our view.

As you consider the adoption of private market investments, it's important to consult with a professional to evaluate the trade-offs of implementing them within your portfolio.