The Journal of Private Markets Investing

Navigating the Private Debt Landscape

2025-06-01T16:58:06+00:00

We examine the evolution and growing importance of the private debt market since the global financial crisis (GFC). We discuss various types of private debt, highlighting their main characteristics and advantages, particularly regarding the illiquidity premium and the smoothing of returns. Additionally, we explore how new regulations in the European Union are facilitating the democratization of private debt markets, making it significantly easier for retail investors to participate and for private debt to be included in open-ended funds.

The private debt market has seen substantial growth since the Global Financial Crisis, with direct lending emerging as the dominant category in Europe and with 40% of deal value allocated to leveraged buyouts and 31% to public-to-private deals.
New regulations in the European Union are democratizing private asset investing by removing previous restrictions and expanding the range of eligible assets, making it more accessible to retail investors through open-ended funds.
Mechanisms like gating and swing pricing are crucial in open-ended funds with private debt, as they help manage liquidity requirements from subscriptions and redemptions, while ensuring a balanced allocation to liquid and semi-liquid debt to meet the fund's liquidity needs.

Has Private Equity Outperformed Public Equities?

2025-06-23T22:19:21+00:00

We present new and updated evidence that investments in buyout and venture capital have outperformed their public-market equivalents on average over the past 30 years. When comparing private-equity performance with that of public equity, it is critical to use an index that accurately mirrors the riskiness of private equity. We use direct alpha to measure private-equity outperformance after adjusting for differences in geography, size and time-varying leverage and sub-industry composition. We find pooled, annualized excess returns to buyout have been 3.8% for vintages 1994 to present, while the analogous excess returns to venture capital have been 2.0%. For vintages since 2000, the corresponding figures are 2.9% for buyout and -0.4% for venture capital. Pooled measures naturally weight larger vintages (such as the more recent ones) more heavily; in contrast, means weight all vintages equally. Mean excess returns since 1994 (2000) for buyout have been 5.2% (4.0%) and for venture capital around 8.1% (-0.2%).

Public-private solutions: squaring the circle?

2025-07-11T00:06:31+00:00

This article describes the challenges of reconciling the inherent liquidity risks of private markets investing with the demands of investors. We begin by, conceptually, unpacking the nuances of liquidity risk and the illiquidity premium. We continue with a parallel history of the growth of private markets, the unfolding of successive liquidity crises, and the development of new liquidity management tools. Finally, we discuss recent innovations that are expected to expand access to private markets significantly, while improving portfolio resilience in the face of liquidity risk.

Certain investors seek a portfolio-level investment approach that addresses the undesired layers of liquidity risk – in particular, portfolio-level spillovers and tail risks – while accepting the inherent illiquidity of private assets. They can then retain a substantial portion of the benefits of private markets investing, including both the illiquidity premium and other return and diversification benefits. Actively managed public-private solutions can achieve this for investors who lack in-house liquidity management capabilities, such as individual investors.

Public versus Private Real Estate: Portfolio Construction Considerations

2025-06-23T15:07:16+00:00

We examine the relationship between the returns of different types of public and private real estate investments and the extent to which they should be considered substitutes in a multi-asset portfolio context. We use principal component analyses to gain insights on the distinct drivers of return across private real estate, listed real estate, and equities. We examine the commonality of return drivers over the longer-term, but also at points of market stress and demonstrate that the investment returns of public and private real estate exhibit material deviations over shorter time periods. We conclude that, instead of thinking of public and private real estate as substitutes, asset allocators need to consider broader portfolio considerations, including the size of the allocation, the objective of the investment and potential liquidity needs.

PRIVATE DEBT: STRATEGIES, RISKS, AND THE EVOLVING ROLE IN INSTITUTIONAL PORTFOLIOS

2025-07-19T22:22:19+00:00

Private debt has become one of the fastest-growing segments of alternative investments, offering institutional investors enhanced yields, diversification, and customizable credit exposure. This paper explores the structural evolution of the private debt market, the impact of post-crisis regulatory reforms, and the proliferation of non-bank lenders. It examines a range of private debt instruments—direct lending, mezzanine, distressed, and venture debt—and investors' strategic approaches, such as active and systematic strategies. The paper also addresses key challenges in valuation, risk management, performance measurement, and strategic asset allocation, especially considering limited liquidity, bespoke structures, and non-standardized benchmarks. Innovations in technology, including AI, blockchain, and digital loan platforms, are also reviewed for their potential to improve sourcing, valuation, and monitoring. Through a comprehensive analysis of strategies, risks, regulatory developments, and operational complexities, this paper positions private debt as a critical and evolving component of modern institutional portfolios.

Choose Your Vehicle: A Closer Look at Private Market Fund Structures

2025-07-11T13:07:16+00:00

Evergreen fund structures for private markets are enjoying significant momentum, with assets under management standing at over $320 billion across US- and EU-domiciled funds. Initially designed to better address the needs of individual investors, these structures are increasingly being considered by institutional investors as well. With these structures offering better liquidity, ease of implementation and immediate asset class exposure, investors are wondering, are these structures just better?

We do not believe there is a universal best choice between private market fund structures. The decision involves a set of trade-offs along four key dimensions. We believe the assessment should reflect the outcomes of an investment program, rather than a single fund.