For many years, the world of private market investments was reserved for financial institutions and the ultrawealthy. More recently, though, that world opened its doors to everyone, and while retail investors’ allocations in private markets are still relatively low, financial experts expect exponential growth: By 2030, retail investors’ allocations to private capital will grow from around $80 billion to $2.4 trillion in the United States, according to a new report from the Deloitte Center for Financial Services. In the European Union, Deloitte expects those allocations to more than triple, from €924 billion to €3.3 trillion in the same time frame.
Private investments are assets that lie outside public market staples like stocks, bonds, and cash. They include so-called alternatives like private equity, private credit, hedge funds, real estate, and direct holdings of private companies. They typically offer less liquidity than public markets, and can be riskier to invest in. The ultrawealthy, who have invested more and more in private markets in recent years, generally view them as long-term investments, and are happy to take on the risk and illiquidity for potentially higher returns than public investments can provide.
