By Abby Schultz
Financial advisors expect to dive deeper into private markets on behalf of their clients this year, especially in venture and growth capital strategies.
A survey conducted for Hamilton Lane, an investment firm specializing in private markets, found that 97% of 390 advisors contacted globally allocate between 1% and 20% of their business to private markets.
Eighty-six percent of these advisors expect to allocate more to private markets this year, although the results didn't capture how much more. It isn't unusual for university endowments to invest half of their assets in private markets, but individual investors need to get their capital back much sooner than an institution investing for perpetuity.
The reasons for the expected uptick in private market investments, according to advisors: investors are looking for higher returns and they want to diversify their holdings.
"It's coming really from the experiences that people have seen other people have in private markets over the years -- whether that is big institutions, endowments or bigger family offices, combined with the continuing concentration in the public markets," Hartley Rogers, executive co-chairman at Hamilton Lane, said in an interview, referring to a dwindling number of public companies and the dominance of a handful of tech titans.
In Rogers' view, the next layer of opportunity within artificial intelligence will be in related products and services created by smaller companies. "The notion of being able to go beyond the large language models into a broader area of opportunity is driving interest in private markets," he says.
It's also good business for asset and wealth managers. Private markets generate about four times more profit per billion dollars of assets under management than traditional investments, according to PwC's 2025 Global Asset & Wealth Management Report, published in November. By 2030, private market revenues are expected to reach US $432.2 billion, and deliver more than half of total asset-management industry revenues, PwC said.
Institutional investors have long allocated substantial portions of their portfolios to private markets. Traditionally, these investments have delivered returns above public markets, but they require substantial minimum investments -- and must be held for long periods, a decade or more in many cases. As public tech stocks have surged, private-equity returns, in particular, have fallen behind public markets, but return dispersion is high, meaning some private-market managers turn in much higher returns than others.
That's true as well among retail funds that invest in private markets -- often referred to as evergreen funds, according to Morningstar and PitchBook. The firms found the best evergreen fund returned 16% for the year through Oct. 31, net of fees, while the worst returned 4.7%.
A preliminary index of private-equity evergreen funds created by Morningstar and PitchBook showed the category returning 9.4% for the year through Oct. 31, compared with a 17.1% gain in a U.S. market index. In all of 2024, the private-equity evergreen index returned 6.4% compared with a 24.1% gain in the U.S. market.
Evergreen funds have been steadily gaining traction for years, reaching $500 billion in assets as of the end of last year, a recent study by Morningstar and PitchBook showed. More assets are expected to flood into retail-oriented funds once the U.S. Department of Labor devises rules for 401(k) funds to invest in the sector.
Hamilton Lane has approximately $15 billion in assets in its 11 evergreen funds.
These funds -- which are often still limited to accredited investors with a net worth of at least $1 million and income of at least $200,000 -- offer more flexibility than traditional, closed private-market funds by allowing investors to sell discrete numbers of shares at periodic intervals.
They also are available for a lower minimum investment, although the entry points can still be high. The minimum investment for Hamilton Lane's Venture Capital and Growth Fund, for example, is $25,000; a common minimum for a traditional closed-end private-equity fund is $5 million.
Evergreen funds can allow investors to redeem shares earlier -- typically equal to a total of 5% of a fund's shares at most per quarter -- by keeping a portion of assets in marketable securities. These vehicles are also often invested in secondary private funds, which own more mature holdings that should generate a return more quickly than the holdings in a new private-equity fund, for example.
Aside from the yearslong holding periods required of most private market funds, individual investors have steered clear of these vehicles because private markets were considered riskier and only the very wealthy could invest in them. The survey found that isn't true now -- 83% said the risk was equal or below the levels in public markets, and 30% said the reward is higher.
Although the standard world of private funds succeeded "in spite of the complexity and difficulty," of investing in them, a shift is under way among investors who are "looking for structures where they can move in and out more on a semi-liquid basis, to do more tailoring of their portfolios," Rogers says.
According to the survey, advisors reported investing in private markets had been evenly allocated across strategies. Within the private-market portion of their clients' portfolios, investors allocated 19% to private equity, 18% to private real estate, 16% to private credit, 16% to venture capital and growth, and 15% to private infrastructure.
For this year, investors are expected to increase their exposure primarily to venture capital and growth, infrastructure, and private equity, the survey found.
Advisors reported the strongest demand for private-market investments among millennials, those aged 30 to 45. "Millennials are in that sweet spot -- they're accumulating enough wealth in order to be able to think longer term about what their investment strategies are," Rogers says. They may be planning for retirement, but it's far enough away that they can stomach illiquidity. "Younger people are not going to have accumulated enough yet to really be able to take advantage of this," he says.
One reason for the growth of private markets is the industry's push to educate advisors and retail investors about the structure of these funds, emphasizing that they are "semi-liquid" -- not the fully liquid funds most investors know.
Investing in these funds "requires a longer time frame in terms of seeing the value add," Rogers says. It's important that investors "understand what they're getting into and have the right mind-set."
Wakefield Research, a Virginia-based market research firm, conducted the survey between Oct. 23 and Nov. 4. Respondents were unaware of Hamilton Lane's affiliation with the research.
Write to Abby Schultz at abby.schultz@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
January 28, 2026 07:00 ET (12:00 GMT)
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