Riding the private market wave while respecting limits of liquidity

As allocations for private markets from asset and wealth managers continue to rise, industry leaders are adamant that the growth reflects structural evolution rather than speculative excess.

Their message is a simple one: alternative assets are now essential, not optional, for investors seeking to navigate higher inflation, geopolitical fragmentation, and the transition from tech adoption to tech deployment.

The upward trend is underpinned by fundamental change in how companies finance themselves, argues Karen Ward, chief market strategist for Emea at JP Morgan Asset Management.

“Going public brings heavy regulatory burdens, and with abundant pools of private capital available, companies are staying private for longer,” she says. “It used to be that a firm would list after three years, now it waits 12.”

Rather than an accumulation of “low-quality, shadow” assets, Ms Ward sees a shift in the corporate lifecycle. Around 40 per cent of private equity exposure today, she points out, lies in technology companies that might once have gone public early. “These are quality businesses operating in private hands,” she adds.

Shaping the narrative

Over at JP Morgan Private Bank, acting as the distribution machine for alternative funds created by the asset management business, interfacing between the manufacturer and the ultimate clients who buy them, the atmosphere is similarly enthusiastic.

The story here is shaped in portfolio construction terms. “When we think about private markets, we’re thinking about return enhancers and diversifiers,” says Grace Peters, the private bank’s New York-based co-head of global investment strategy. “The goal is resilience, helping clients stay invested so they can compound wealth over time.”

That concept of resilience is echoed in JP Morgan’s 2026 Long-Term Capital Market Assumptions, which emphasise a “60/40+” model, the traditional 60/40 equity-bond mix enhanced with 30 per cent in diversified alternatives. The analysis projects annual returns of 6.9 per cent for 60/40+ portfolios, with volatility notably lower than traditional portfolios.

For Ms Peters, the attraction lies especially in real, asset-backed exposures that generate income uncorrelated with public markets.

“Many family offices worry about inflation, yet hold little infrastructure exposure,” she observes. “But contracted revenues linked to inflation over long periods offer income generation with inflation protection, a sensible complement to bonds.” The key, she adds, is balance and diligence: “Don’t go wild for the return-enhancement dream; build resilient portfolios.”

Polishing the brand

Some fund promoters even go as far as painting the maturation of private markets as part of a two-decade transformation in the industry’s reputation and practices.

“When I began my career, private equity in Europe had a poor image; it was seen as financial engineering, breaking companies apart to make quick gains,” recalls Edouard Boscher, head of private equity at Paris-based fund house Carmignac. “That has changed completely. Today’s leading franchises create value by helping managers build businesses, identifying growth markets, and implementing long-term strategies.”

He acknowledges that higher interest rates have compressed valuations and extended holding periods. “People are keeping assets for six to eight years instead of four to five,” he says. “But over time, as companies continue to grow, that offsets the lower multiples. I see no reason why value creation should stop. Over the long term, I remain very positive.”

Accessibility is also redefining the asset class. “Evergreen structures are transforming the way private investments are offered to high net worth investors,” says Katie Lee, director of alternatives for Emea wealth management at US house Franklin Templeton. They allow lower minimums, continuous exposure, and a degree of liquidity designed to suit high net worth investors’ needs, she adds.

Unlike traditional private equity funds with capital calls and long lock-ups, evergreen structures deploy capital immediately into existing portfolios. “They help investors manage exposure while accessing institutional-quality managers once reserved for sovereign wealth and large institutions,” Ms Lee explains.

Growing enthusiasm for secondaries as a core allocation tool is also highlighted by asset managers. “Secondaries offer diversified exposure and, in the middle market especially, attractive opportunities,” says Ms Lee. “Smaller companies often have lower leverage, higher growth potential, and more flexible exit routes, typically through sales to strategic buyers rather than IPOs.”

Beyond equity, Ms Lee sees opportunity in private credit, particularly real estate debt, as banks retreat from commercial lending. Multi-family real estate debt, secured by desirable rental assets, is especially resilient, she says. “We’re also seeing renewed interest in European logistics and industrial real estate, where supply-demand imbalances create attractive valuations.”

Cautions over consistency

But some well-placed observers, including Amin Rajan, CEO of the Create-Research consultancy, have however, cautioned about the consistency of long-term returns for private markets and say investors should expect lower returns in the future.

The expansion of private markets has also prompted inevitable questions about potential overheating, admits Ms Ward at JP Morgan Asset Management. “There’s been massive growth in the private markets,” she notes. “With all the scrutiny now focused on public credit, questions naturally arise about whether that growth was justified.”

She also warns investors to respect the limits of liquidity. “No asset manager should ever tell you these can be made liquid; they cannot. Investors must hold them through.”