Portfolios with 20pc private markets allocation ‘drastically outperform’
Portfolios with a 20 per cent allocation to private markets tend to “drastically outperform” their wholly public markets counterparts, a new report by global investment firm Carlyle shows.
“As a result of the private return premium and the volatility-dampening features of private markets, portfolios with a 20 per cent allocation to private assets dramatically outperform counterparts restricted to publicly-traded stocks and bonds,” the company said.
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It added that the outperformance is “steady across the range of risk tolerance”, with investment grade private credit, such as asset-backed finance, boosting the risk-adjusted returns of relatively conservative portfolios.
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“A portfolio restricted to listed securities can no longer deliver the same degree of diversification it once did,” the report added.
“The investment opportunity set has moved decisively towards private markets. So too must investors’ portfolio allocations.”
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