The private markets asset classes, such as private equity, infrastructure, private debt and real estate, can provide real value in a holistic investment portfolio.
No longer confined to an “alternative” asset class, private equity represents a ~ $11 trillion market, c. 12% of its public counterparts (1).
These asset classes are estimated to grow far beyond the public asset classes’ growth rate and are thus poised to represent an ever growing share of the investable landscape.
Beyond becoming a ubiquitous asset class, integrating private markets in an investment portfolio offers significant advantages in terms of enhanced diversification, improved risk/reward ratio, and can act as a real stabilizer to portfolio volatility.
Over the past couple of years, several structural evolutions shine a new light on the traditional 60/40 portfolio model. Compressed bond yields have diminished income and risk-buffering benefits, while equity volatility has increased. Most critically, the negative correlation between stocks and bonds, which underpinned diversification for two decades, has turned positive since mid-2021 (2), challenging the portfolio’s core premise. Additionally, the S&P 500 has reached extreme concentration levels, with the top 10 stocks now representing 41% of market capitalization while contributing only 32% of earnings (3) as of December 2025.
Private markets offer compelling solutions to complement the 60/40 portfolio model in this new environment: enhanced diversification away from concentrated public equity exposure, improved risk adjusted returns through active management, capture of an illiquidity premium, and inflation-hedging characteristics. This paper demonstrates that strategic allocations to private equity, private debt, real estate, and infrastructure can materially improve portfolio outcomes for institutional investors, family offices, and high-net-worth individuals across diverse risk profiles.
(1) HarbourVest, “How does the size of private markets compare to public markets?” https://www.harbourvest.com/insightsnews/insights/cpm-how-does-the-size-of-private-markets-compare-to-public-markets/
(2) Lombardi, M. J., & Sushko, V. (2023). The correlation of equity and bond returns. In BIS Quarterly Review, December 2023. Bank for International Settlements.
(3) T. Frawley (2026). The ”Great Narrowing” S&P 500 concentration. RBC Wealth Management.