Why Private Markets?
Public markets have become increasingly concentrated, with a large percentage of the major indices being comprised of a handful of companies and significant overlap of positions between indices.
Capital formation has shifted away from public markets and companies are staying private for longer. As a result, large portions of the investment landscape are not available to investors through publicly traded equities and bonds.
By investing in private markets, investors can:
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Complement their portfolio through access to non-traditional strategies
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Reduce risk through diversification
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Enhance returns through strategies beyond traditional asset classes
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Better manage volatility cycles
Building a Private Markets Portfolio
Private markets allocation can be implemented through a combination of Evergreen Funds and Opportunistic Strategies depending on an investor's investment objectives, risk appetite and liquidity preferences.
Evergreen Funds provide diversified exposure to private markets across multiple strategies and offer benefits such as immediate capital deployment, periodic liquidity and no fixed end date. As a result, they are typically used as a long-term stable foundation for private markets exposure.
Opportunistic Strategies are most commonly accessed through drawdown funds and involve multi-year capital commitments, limited liquidity, and longer realization timelines. These strategies are deployed selectively based on market conditions and are generally used to enhance return potential as allocation to private market investments scale.
Feature | Evergreen Fund | Drawdown Fund |
|---|---|---|
Access | Periodic subscriptions - monthly or quarterly | Commit capital during the fundraising period |
Fund Life | Perpetual | Varies based on fund strategy from 7 to 10 years |
Investments | 100% invested upon subscription | Capital typically drawn over 2-3 year |
Liquidity | Periodic liquidity (typically quarterly) subject to fund discretion | At end of fund life as the fund exits investments |
Distributions | Typically periodic distributions that can be reinvested to compound returns | Typically paid back at end of investment period |
Complexity | Lower | Higher |
Role in Portfolio | Foundation/ core exposure | Opportunistic providing return enhancement |
Best For | Entry point for first time private market investors with emphasis on simplicity and liquidity | Experienced investors who want to overlay strategies for higher return longer term strategies |
High-level allocation examples based on different investor profiles and risk considerations are outlined on the Portfolio Construction page. To ensure these portfolios are implemented thoughtfully, particularly for investors new to private markets, we apply a defined set of portfolio construction guardrails. These guardrails are intended to balance diversification, liquidity, and long-term wealth objectives while limiting reliance on any single investment, manager, or strategy.
Illustrative Allocation and Concentration Guidelines
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Set initial private markets exposure at approximately 10% of investable net worth achieved through investment in Evergreen Funds
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Implement incremental allocations above 10% through Opportunistic Strategies, as appropriate
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Limit any single Evergreen Fund allocation to no more than 20–25% of the total allocation (i.e. no more than 2–2.5% of total net worth)
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10% allocation to private markets
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Exposure gained through Evergreen Funds that provide immediate investment and some liquidity
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Large allocation to private credit to generate income – target income of 8-10% (4-6% over benchmark rates)
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Smaller allocation to private equity, infrastructure and real estate for capital appreciation and to diversify portfolio