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.

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

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

Why Private Markets?

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

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
(2017-2022)

60/40 Portfolio

Annualized Return5.7%
Annualized Volatility13.3%
Current Yield2.9%

Portfolio with Private Market Allocations

Annualized Return8.2%
Annualized Volatility11.0%
Current Yield3.2%

Source: Bloomberg, Morningstar, as of 9/30/2022. As commonly used in the industry, the 60/40 portfolio is 60% allocated to the S&P 500 Index and 40% is allocated to the Bloomberg US 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 Assoc. US Private Equity Index. There can be no assurance that any Blackstone fund or investment will achieve its objectives or avoid substantial losses, or that alternative investments will generate higher returns than other investments. Annualized returns and volatility are calculated based on the quarterly returns over the 5-year period from October 2017 to September 2022. The yield on the portfolio with a private market alternative allocation was calculated using the annualized S&P 500 Dividend Yield, the annualized Bloomberg US 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. The information herein is provided for educational purposes only and should not be construed as financial or investment advice, nor should any information in this document be relied on when making an investment decision. Opinions expressed reflect the current opinions of Blackstone as of the date hereof and are based on Blackstone’s opinions of the current market environment, which is subject to change. Past events and trends do not imply, predict or guarantee, and are not necessarily indicative of, future events or results.

alternatives exposure

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

Alternatives Exposure

Source: Willis Towers Watson, “Global Pension Assets Study,” 2022; National Association of College and University Business Officers, “TIAA Study of Endowments,” 2021; Cerrulli, “U.S. Intermediary Distribution 2021,” 2021. For Endowments, the alternative asset allocation is for the Public College, University or System only and represented by allocations to Other equities (includes marketable alternatives, private equity and venture capital) and Real assets (includes TIPS, REITs, commodities / futures, publicly traded Master Limited Partnerships (MLPs), public traded natural resource equities, private energy and mining, and private agriculture and timber). Averages provided are dollar weighted. For Individuals, the alternative asset allocation includes “Alternatives” (e.g., long/short, market neutral, currency) and “Other” as defined as UITs, listed and unlisted closed-ended funds and private funds. Responses are weighted based on the average asset allocation of a moderate client.

Read the complete “Essentials of
Private Markets”

A WEBINAR SERIES FOR FINANCIAL PROFESSIONALS

Private Markets Perspectives

A monthly series featuring Blackstone thought leaders on
the themes shaping markets, the expansion of private
markets alternatives and how these asset classes may play an important role in your clients portfolios.

CE Credit may be available.