Can private markets be the alternative to lofty public market valuations?

LiveWire11-13

After two consecutive years of stellar performance in the equity market and further tightening of credit spreads, valuations in public markets are currently well above their long-term averages. Such ...

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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nCan private markets be the alternative to lofty public market valuations?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2025-11-13 08:47 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.livewiremarkets.com/wires/can-private-markets-be-the-alternative-to-lofty-public-market-valuations><strong>LiveWire</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>After two consecutive years of stellar performance in the equity market and further tightening of credit spreads, valuations in public markets are currently well above their long-term averages.\nSuch ...</p>\n\n<a href=\"https://www.livewiremarkets.com/wires/can-private-markets-be-the-alternative-to-lofty-public-market-valuations\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU2023250504.SGD","symbol_name":"Allianz Thematica Cl AMg DIS H2-SGD","start_time":0,"source_url":"https://www.livewiremarkets.com/wires/can-private-markets-be-the-alternative-to-lofty-public-market-valuations","article_id":"2583582897","we_media_id":null,"thumbnails":[],"rights":{"source":"livewire_stock","url":"https://www.livewiremarkets.com/wires/can-private-markets-be-the-alternative-to-lofty-public-market-valuations","rn_cache_url":null,"directOrigin":true},"url":"https://stock-news.laohu8.com/highlight/detail?id=2583582897","pubTimestamp":1762994877,"columns":[],"sourceInfo":{"source_id":"livewire_stock","name":"Livewire Markets"},"weMediaInfo":null,"summary":"After two consecutive years of stellar performance in the equity market and further tightening of credit spreads, valuations in public markets are currently well above their long-term averages.Such an environment, especially as inflationary pressure points to interest rates likely remaining higher for longer, creates a challenging situation for investors considering how to adjust their portfolio in 2025.A key question needs to be asked: What can one do to enhance potential returns, improve diversification, and mitigate volatility?The answer might be found in private markets.The S&P 500’s forward P/E ratio of 21.7 implies annualised 3% returns over the next three years. . Historically, the relationship between the S&P 500’s forward P/E ratio and subsequent three-year returns for the benchmark averages 6.4%. However, the S&P 500’s current forward P/E ratio of around 22x implies an inflation-adjusted annualised return of only around 3%.Adding to the challenge of elevated valuations and co","collect":0,"end_time":0,"defaultTopTitle":"livewiremarkets.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"LU2023250504.SGD":"Allianz Thematica Cl AMg DIS H2-SGD","SPXU":"三倍做空标普500ETF-ProShares","SNVD.UK":"LS -1X NVIDIA","LU2491049909.HKD":"WELLINGTON SUSTAINABLE OUTCOMES \"A\" (HKD) ACC","SH":"做空标普500-Proshares","IVV":"标普500ETF-iShares","SSO":"2倍做多标普500ETF-ProShares","LU2322448791.USD":"ALLIANZ GLOBAL INTELLIGENT CITIES INCOME \"AMG\" (USD) INC","NVDS":"1.5倍做空NVDA ETF-Tradr","LU2491050071.SGD":"WELLINGTON SUSTAINABLE OUTCOMES \"A\" (SGDHDG) ACC","LU0170899867.USD":"EASTSPRING INVESTMENTS WORLD VALUE EQUITY  \"A\" (USD) ACC","LU2543165471.USD":"E FUND (HK) GLOBAL QUALITY GROWTH \"A\" (USD) ACC","IE00BDRTCR15.USD":"PINEBRIDGE GLOBAL DYNAMIC ASSET ALLOCATION \"ADC\" (USD) INC A","OEX":"标普100","LU1119994496.HKD":"FIDELITY WORLD \"A\" (HKD) ACC","LU2491050154.USD":"WELLINGTON SUSTAINABLE OUTCOMES \"A\" (USD) ACC","LU1323610961.USD":"UBS (LUX) EQUITY SICAV - LONG TERM THEMES (USD) \"P\" (USD) ACC","LU1267930490.SGD":"TEMPLETON GLOBAL EQUITY INCOME \"AS\" (SGD) INC A","NVDU":"2倍做多NVDA ETF-Direxion","SPY":"标普500ETF","LU0061474705.USD":"THREADNEEDLE (LUX) GLOBAL DYNAMIC REAL RETURN \"AU\" (USD) ACC","NVDX":"2倍做多NVDA ETF-T-Rex","IE00B1XK9C88.USD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A\" (USD) ACC","UPRO":"三倍做多标普500ETF-ProShares","LU0048584097.USD":"FIDELITY FUNDS  GLOBAL THEMATIC OPPORTUNITIES \"A\" (USD) INC","NVD":"2倍做空NVDA ETF-GraniteShares","VOO":"Vanguard标普500ETF","NVDY":"NVDA期权收益策略ETF-YieldMax","LU1992135399.USD":"Allianz Global Intelligent Cities AT Acc USD","SDS":"两倍做空标普500 ETF-ProShares","IE00BFSS7M15.SGD":"Janus Henderson Balanced A Acc SGD-H","LU0289960550.SGD":"AB FCP I - GLOBAL EQUITY BLEND PORTFOLIO 'A' (SGD) ACC","LU0070217475.USD":"JPM GLOBAL SELECT EQUITY \"A\" ACC","NVDD":"1倍做空NVDA ETF-Direxion",".SPX":"S&P 500 Index","LU0053666078.USD":"摩根大通基金-美国股票A（离岸）美元","NVIW.SI":"NVDA 3xLongSG261006","LU2191332357.HKD":"SCHRODER ISF SUSTAINABLE MULTI-ASSET INCOME \"A\" (HKDHDG) INC","NVDS.UK":"LS -1X NVIDIA","NVD2.UK":"2X NVIDIA ETP","LU0082616367.USD":"摩根大通美国科技A（dist）","OEF":"标普100指数ETF-iShares","NVD3.UK":"LS 3X NVIDIA","LU2360107168.USD":"BGF NEXT GENERATION TECHNOLOGY \"A4\" (USD) INC","2NVD.UK":"2X NVIDIA ETP","3NVD.UK":"LS 3X NVIDIA","NVDA":"英伟达"},"translate_title":"私募市场能成为公开市场高估值的替代品吗？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"UPRO":0.6,"SPXU":0.6,"OEX":0.6,"NVDA":1,"NVIW.SI":0.6,".SPX":0.9,"NVD2.UK":0.6,"NVDY":0.6,"2NVD.UK":0.6,"SH":0.6,"IVV":0.6,"MESmain":0.6,"NVDX":0.6,"OEF":0.6,"SDS":0.6,"SPY":0.9,"SNVD.UK":0.6,"NVD3.UK":0.6,"NVDS.UK":0.6,"NVD":0.6,"NVDD":0.6,"ESmain":0.6,"NVDU":0.6,"3NVD.UK":0.6,"SSO":0.6,"NVDS":0.6,"VOO":0.9},"content_text":"After two consecutive years of stellar performance in the equity market and further tightening of credit spreads, valuations in public markets are currently well above their long-term averages.\nSuch an environment, especially as inflationary pressure points to interest rates likely remaining higher for longer, creates a challenging situation for investors considering how to adjust their portfolio in 2025.\nA key question needs to be asked: What can one do to enhance potential returns, improve diversification, and mitigate volatility?\nThe answer might be found in private markets.\nThe current state of public markets\nPublic markets are looking expensive.\n\n\n\n\n\n\n\n\n\nThe S&P 500’s forward P/E ratio of 21.7 implies annualised 3% returns over the next three years. (Source: Bloomberg, Apollo Chief Economist)\nHistorically, the relationship between the S&P 500’s forward P/E ratio and subsequent three-year returns for the benchmark averages 6.4%. However, the S&P 500’s current forward P/E ratio of around 22x implies an inflation-adjusted annualised return of only around 3%.\nIn addition, the risk premium for holding public stocks – the difference between the S&P 500 earnings yield and the 10-year treasury yield – is negative. In other words, investors are paying to take risk as opposed to being paid to do so.\nPublic credit markets are also facing tight valuations. High yield spreads are currently near the lowest levels seen in decades.\nThe compression in credit spreads reflects a combination of a heightened risk appetite among investors. However, it underscores the fact that investors are not being adequately compensated for the risks they are taking.\nWhere has the diversification gone in equities?\nIn addition to high valuations, diversification is much harder to achieve.\nThe S&P 500 has become increasingly concentrated, with a handful of stocks disproportionately driving market performance. As of the end of 2024, for example, the combined weight of stocks with a 3% or greater share in the index is at the highest level it has been in decades.\n\n\n\n\n\n\n\n\n\nThe S&P 500 is heavily concentrated. (Source: Bloomberg, Apollo Chief Economist)\nWith increased concentration of the S&P 500, a handful of large stocks dominate its recent performance.\nFor example, simply removing the semiconductor company, Nvidia (NASDAQ: NVDA) from the S&P 500 reduced its 2024 annual return from around 25% to 20%. If you then strip out the remaining of the popular “Mag 7” stocks, this return drops further to around 12%.\n“In our view, this level of dependency on NVIDIA and a few other stocks underscores the fragility of the current market landscape, where performance hinges on a narrow base of contributors.\"\nThe bottom line is that investors in public markets are effectively over-leveraged to the earnings and growth prospects of a handful of stocks.\nStocks and bonds remain highly correlated\nAdding to the challenge of elevated valuations and concentrated returns is the rising correlation between public stocks and bonds.\nHistorically, the negative correlation between these two asset classes provided diversification and a natural hedge within the traditional 60/40 portfolio framework, where a portfolio is split between 60% stocks and 40% bonds.\n\n\n\n\n\n\n\n\n\nFinding diversification in public markets has become more difficult. (Source: Bloomberg, Apollo Chief Economist)\nThat relationship has broken down in recent years. For example, in 2022, stocks and bonds fell together, and, in 2023, they rose together. The three-year rolling correlation between these two asset classes has now reached its highest levels in decades.\nThe case for private markets\nHigh valuations, concentrated equity markets, and the convergence of public bond and stock performance have, in our view, eroded the diversification benefits of a traditional 60/40 portfolio.\nThis leaves investors more exposed to systemic risk, especially during periods of market stress.\nEnter private markets.\nBy shifting allocations from public to private assets, investors can gain access to an expansive and increasingly diverse universe of investment opportunities. In fact, private markets have become an increasingly important component of the broader economy.\n“87% of US companies with revenues greater than $100 million today are private. At the same time, the number of publicly listed companies in the US has declined from a peak of more than 8,000 in 1996 to just over 4,000 in 2024”.\nWithin this growing space, we believe that the focus in 2025 should be on private market strategies across equity, credit, infrastructure, and hybrid opportunities that can deliver tailored solutions and potential enhanced, risk-adjusted returns.\nRethinking asset allocation\nThe 60/40 portfolio became the standard allocation for investors for one reason: it worked.\nHowever, in today’s environment, which includes elevated valuations, rising correlations between stocks and bonds, and concentrated equity markets, challenges the effectiveness of this traditional approach.\nInstead of reallocating 10% of a portfolio from one highly correlated public asset to another, the diversification potential offered by private markets could be considered, which can offer differentiated return drivers, lower correlations with public markets, and opportunities to enhance portfolio resilience in periods of market stress.\nBy rethinking traditional asset allocation and embracing the flexibility and potential diversity of private markets, investors can unlock long-term growth and resilience, allowing portfolios to be well-positioned for the challenges and opportunities ahead.\nFor the full report, “Can private markets be the alternative to lofty public market valuations”, including a deeper look at each private asset class from Apollo Global Management, click here.\n\n\n\nNever miss an update\n\n    Enjoy this wire? Hit the ‘like’ button to let us know. \n    Stay up to date with my current content by \n    following me below and you’ll be notified every time I post a wire","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0,"need_auth":false,"code":"91000000","status":"200"},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.35.10","shortVersion":"4.35.10","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2583582897","isCrawlerRequest":true}