From niche to mainstream: How private markets have become a core part of modern investing

For decades, the “60/40 portfolio” — 60% stocks and 40% bonds — was one of the standard approaches for balancing growth and stability. That model may have worked well for a long time, but markets have evolved. Interest rate changes, inflation, and volatility in the market have challenged the effectiveness of relying only on stocks and bonds.

At the same time, private markets are continuing to expand rapidly, moving from niche to more mainstream and are now sitting alongside public markets as an essential part of the financial system. Once typically reserved for institutions and the ultra-wealthy, private markets today are available to a greater range of investors and account for trillions in capital.

The shifting public-private balance

Public markets remain foundational. They provide liquidity, transparency, and broad access. But they no longer capture the same breadth of opportunity they once did. IPO activity has slowed in recent years, and many companies now choose to stay private longer. In the United States, about 87% of companies with revenues above $100 million are privately held. For every public company of that size, there are roughly seven private ones.

Source: Blue Owl, The growing opportunity in private markets; Capital IQ as of 9/30/24

Portfolio strategies are evolving

Institutions have previously relied on private markets to complement public holdings. BlackRock CEO Larry Fink recently suggested that portfolio allocations of the future may look more like 50/30/20, with 20% in private markets. While not a prescription, that observation highlights how much the balance has shifted over time.

Industry research by Blue Owl projects that private market assets under management are expected to reach more than $24 trillion by the end of 2028. That scale reflects not only investor demand, but also the structural role private markets now play in helping finance economic growth, for example funding startups or supporting business expansion and real estate development.

Source: Future Standard, Private equity has historically outperformed public markets, published June 2024. Data from Pitchbook North American Private Equity Index, as of December 31, 2023.

Why it matters beyond institutions

The rise of private markets is becoming increasingly more relevant beyond the institutional world. Thanks in part to regulatory shifts and digital platforms, accredited investors now have relatively broader access to opportunities once typically reserved for institutions.

For some individuals this shift may feel particularly relevant. Some careers take decades when it comes to training, career planning, and financial commitments. A similar long-term mindset can be useful when looking at private markets. Of course, not everyone’s financial situation is the same, but the broader evolution of access is an important trend to watch.

I’ve seen this long-term career mindset personally. My father is a doctor who devoted decades to his practice while working to build financial security over time. Observing that journey has helped me understand how certain professionals, who require sacrifice and long-term mindsets in their careers, might utilize a similar approach when it comes to making financial decisions.

Balancing challenges

None of this is to say that private markets are without challenges. They are typically illiquid investments, meaning they cannot be easily sold or exchanged for cash, and are intended for investors who do not need a liquid investment. But they can play an important role in the financial system. Their expansion is changing the structure of global capital markets by channeling more long-term capital toward private companies, diversifying sources of funding, and creating new pathways for growth outside traditional public market channels.

Looking ahead

The question today is not whether private markets will remain a niche corner of investing. Private markets have grown in scale and visibility, increasingly complementing traditional public market investments. The more relevant question is how they might continue to evolve in helping shape the flow of capital. Understanding the expanding role of private markets — their scale, their risks, and their opportunities — may offer a more complete picture of modern finance.

John Imbriglia is the CEO of Crowd Street, a platform for self-directed private market investments with over $4 billion raised. John has over twenty years of investing and operating experience at the intersection of financial technology, the private markets, and high net worth investors.

CrowdStreet, Inc. (Crowd Street) offers investment opportunities on its website (the “Platform”). Broker-dealer services in connection with the placement of securities are offered through CrowdStreet Capital LLC (Crowd Street Capital), a registered broker-dealer Member FINRA/SIPC. Investment advisory services are offered exclusively to private funds and not otherwise provided to Crowd Street’s members through CrowdStreet Advisors, LLC (Crowd Street Advisors), a federally registered investment adviser. This communication is for informational purposes only and should not be regarded as a recommendation, an offer to sell securities, or a solicitation to buy any investment products or services. Investment opportunities available through Crowd Street are speculative and involve substantial risk. Visit CrowdStreet.com for additional disclosures, our Terms of Use, and Privacy Policy.

This article was written by an employee of Crowd Street and has been prepared solely for informational purposes. This article is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any investor. All investing involves risk, including the possible loss of money you invest, and past performance does not guarantee future performance. All investors should consider such factors in consultation with a professional advisor of their choosing when deciding if an investment is appropriate.

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