Essentials of Private Markets

Learn how assets such as private real estate, credit, and equity can fit into investment portfolios.

What Are Private Markets?

Private markets can offer investors access to assets, opportunities
and strategies unavailable through public stocks and bonds.

Private equity funds invest in non-publicly traded companies, ranging from startups to large private enterprises.

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Private credit funds issue corporate loans and other credit instruments that do not involve a traditional bank and are not publicly traded.

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Private real estate funds invest directly in real estate properties ranging from warehouses to apartments.

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Closing the Knowledge Gap

Joan Solotar, Global Head of Private Wealth Solutions, explains Blackstone’s commitment to closing the knowledge gap on private markets and the role these markets can play in individual investors’ portfolios.

Why Private Markets?

Private markets may provide attractive return opportunities, as well as more
portfolio diversification and lower volatility than publicly listed securities.1

allocating to private markets

Allocating to asset classes such as private equity, private real estate, and private credit can reshape the risks and returns of investment portfolios.

alternatives exposure

Individual investors are typically underallocated to alternatives, which includes private markets, compared to institutional investors.

allocating to private markets

Allocating to asset classes such as private equity, private real estate, and private credit can reshape the risks and returns of investment portfolios.

Private Markets: An Illustration
(2008-2023)

60/40 Portfolio

Annualized Return4.7%
Annualized Volatility12.6%
Current Yield2.9%

Portfolio with Private Market Allocations

Annualized Return6.5%
Annualized Volatility10.3%
Current Yield3.4%

Source: Bloomberg, Morningstar, Cambridge Associates, NCREIF, Cliffwater, as of 3/31/2023. As commonly used in the industry, the 60/40 portfolio is 60% allocated to the MSCI ACWI and 40% is allocated to the Bloomberg Global Aggregate Bond index. Private Credit is represented by the Cliffwater Direct Lending Index. Private Real Estate is represented by the NFI-ODCE Index. Private Equity is represented by the Cambridge Associates. US Private Equity Index. Annualized returns and volatility are calculated based on the quarterly returns over the 15-year period from April 2008 to March 2023. The yield on the portfolio with a private market alternative allocation was calculated using the annualized MSCI ACWI Dividend Yield, the annualized Bloomberg Global Aggregate Bond Yield, annualized Cliffwater Direct Lending Index quarterly income, and the annualized NFI-ODCE quarterly income. There is no yield from the private equity allocation, so private equity did not contribute to the annualized yield calculation. Past performance does not predict future returns.

alternatives exposure

Individual investors are typically underallocated to alternatives, which includes private markets, compared to institutional investors.

Alternatives Exposure

Source: Thinking Ahead Institute, “Global Pension Assets Study,” 2023; National Association of College and University Business Officers, “2023 NACUBO-TIAA Study of Endowments,” 2023; Cerrulli, “U.S. Intermediary Distribution 2022,” 2022. For Endowments, the alternative asset allocation is for the Public College, University or System only and represented by allocations to Alternative Strategies (includes marketable alternatives (hedge funds), private equity, private venture capital, and real assets). Averages provided are dollar-weighted. For Individual Investor, Bain & Company, Global Private Equity Report 2023.

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Essentials of Private Equity

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Essentials of Private Credit

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Essentials of Private Real Estate

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  1. There can be no assurance any alternative asset classes will achieve their objectives or avoid significant losses. Diversification is not a guarantee of either a return or protection against loss in declining markets.

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