As public markets dim, private securities markets have boomed. Many early-stage firms seek to remain private for as long as possible due to burdensome regulatory requirements and excessive costs. This has pushed big money to jump to the head of the line and invest in these firms before a possible public offering. Markets have responded, and there is increasing access to private securities and other alternative assets.
A study published by Northern Trust Global Asset, which surveyed 180 asset owners across North America, EMEA, and APAC, found that 86% of these entities invest in private markets, including private equity, real estate, and more.
Technology plays a big role, as new programs and platforms can support a wider variety of assets—both in terms of acquisition and management.
Michael Aldridge, President and CRO of Accelex – a private assets AI firm, says the Northern Trust study shows how the “spotlight” is moving from public to private capital markets.
“Private markets have consistently delivered strong, risk-adjusted returns, offering diversification that public markets are struggling to match in recent years. This growing confidence not only shows the strength of private markets but is also a reflection of the huge advancements in transparency that have reshaped investor access to data in the space,” says Aldridge.
He states that in the past “opacity” has been a serious challenge for private investments which limits an investors ability to make a good decision. But in the past few years there have been significant breakthroughs in access to data, AI and automation, improving the ability of investors to analyse private assets.
“As transparency improves, so too does investor confidence, ushering in a new era where private markets are no longer constrained by obscurity, but empowered by data-driven insights.”
The Northern Trust study states that this “need for research, analytics, and data aligns with the growing complexity of investment strategies, particularly for those investing in alternatives and diversified.” The study posits that outsourcing drives efficiency.