What Are Private Markets And Why Are More Investors Turning to Them?

As public equities grow increasingly volatile and saturated, with growing market volatility, more sophisticated investors are exploring opportunities beyond the stock market. Enter private markets, a once-exclusive arena now becoming more accessible through the right wealth manager. Whether you’re already working with a wealth manager or just starting to explore alternative investments, this guide is for you.

What Are Private Markets: And Why Are More Investors Turning to Them?

Private markets refer to investments in assets that are not listed on public exchanges ^[1]. These typically include:

• Private equity – the acquisition of stakes in private companies, often with the goal of driving growth, operational improvements, and eventual exit through a sale or initial public offering (IPO).
• Private debt/Private credit – lending to businesses or projects, typically via direct lending or private credit funds
• Real assets – such as infrastructure investments, real estate, or natural resources not traded on public markets.
• Venture capital – early-stage investments in innovative startups.

If you’re interested to understand the different flavours of the private markets our next article may help: [How Can Investors Access Opportunities in Private Markets?}

Historically, private markets were the domain of institutional investors and ultra-high-net-worth families. But access is gradually opening up. Wealth managers are playing a central role in this shift, offering more clients exposure to these asset classes through vetted, manageable routes.

Our study in recent years of 2,292 investors with over £2 million in investable assets, supported by industry research from firms like Russell Investments, found that 45.4% expressed interest in investing in private markets, highlighting strong and growing demand ^[2].

Here are some of the key reasons investment opportunities investors are increasingly interested in:

1. Higher Return Potential

Private market investments often aim for higher long-term returns than their public equivalents. In areas like growth equity or private lending, investors can potentially capture an “illiquidity premium”, though this comes with longer holding periods and greater complexity ^[3].

2. Diversification

Private assets tend to behave differently from listed equities and bonds. That makes them a useful way to reduce overall portfolio volatility, especially during turbulent market cycles as seen during the global financial crisis.

3. Access to Innovation and Growth

Private equity and venture capital allow investors to back companies during their highest-growth phases, long before they reach public markets.

4. Income-Generating Alternatives

Private credit and infrastructure can deliver stable income streams, sometimes with floating rates that offer protection in rising interest rate environments.

If you're curious about who’s turning to private markets, including trends by age group, wealth level, and investment experience, read our article: [Who's Really Investing in Private Markets? What the Data Says About Investors Like You]

How Can Investors Access Private Markets?

Private markets are increasingly accessible to high-net-worth investors through wealth managers. However, the route into private equity, credit, real assets, and venture capital depends greatly on the type of investment vehicle used, each offering varying degrees of access, liquidity, and suitability ^[4].

Listed Investment Trusts

These remain the most accessible option. These are publicly traded vehicles that allow exposure to private market strategies with daily liquidity, albeit with potential discounts or premiums to their underlying net asset value (NAV). While the underlying assets are illiquid, the ability to buy and sell shares on the stock exchange makes them attractive to wealth managers and retail investors alike. They are widely used across private equity, credit, infrastructure, and even some later-stage venture capital.

Evergreen Funds

These are open-ended vehicles designed to offer periodic liquidity (e.g. monthly or quarterly) while investing in illiquid assets. Evergreen funds allow investors to subscribe and redeem on a regular basis, although redemptions may be gated or deferred depending on market conditions. These funds have become increasingly popular among wealth managers seeking private credit and diversified private equity exposure in client portfolios without the full illiquidity of closed-end funds.

Long-Term Asset Funds

LTAFs are a UK-specific structure introduced by the FCA to encourage long-term investment in illiquid assets, particularly for defined contribution pensions and increasingly, advised wealth clients. These funds allow for structured, limited liquidity (often quarterly) and are subject to stringent regulation, including liquidity matching and oversight. LTAFs are gaining traction as they strike a regulatory balance between accessibility and investor protection. These have been contentious with some investors viewing too much government oversite on a portfolio is not in the best interest of the investor.

Feeder funds

Feeder funds or platforms give investors access to institutional-grade private market funds by pooling capital through a managed vehicle. While this offers access to otherwise restricted opportunities, it typically replicates the illiquidity of the underlying fund managed by general partners, often locking up capital for 7–12 years. Wealth managers use these structures for clients who can tolerate long holding periods in exchange for access to high-quality private equity or credit managers.

Fund-of-funds

Fund-of-funds invest across multiple private market funds, providing diversification across venture capital funds, private equity, and credit. These are often used by investors looking for manager selection expertise and broader exposure. Liquidity is usually aligned with the underlying funds, leading to long lock-up periods.

Direct investments

These represent the most illiquid route, involving ownership of a specific asset or participation in a single deal. Direct investment requires high levels of due diligence and investor sophistication, and returns are typically realised only at the point of exit. Direct investments are more common among ultra-high-net-worth clients or family offices with access to sourcing and legal support.

For wealth manager clients, understanding the differences between these vehicles is critical. Liquidity, regulation, access, and transparency all vary, and matching the right structure to an investor’s needs is essential for effective portfolio construction in private markets.

The Role of Wealth Managers in Unlocking Private Market Access

For most individual investors, knowing that private market opportunities exist is only half the challenge, the real question is how to access them reliably, safely, and with proper oversight.

This is where wealth managers come in.

A growing number of firms are now integrating private equity, private credit, and real asset strategies into client portfolios. But beyond product selection, the real value lies in how wealth managers provide tailored investment advice and help investors navigate the structural barriers that come with private markets, and ensure alignment with personal goals.

Here’s what that looks like in practice:

• Portfolio Integration – Ensuring your private market exposure complements your broader portfolio strategy, rather than simply sitting alongside it.
• Curation and Sourcing – If you’re looking outside listed trusts and funds, the wealth managers can help access high-quality, often exclusive, opportunities that aren’t available on public platforms. These might include direct investments, specialist funds, or co-investments typically reserved for institutions.
• Due Diligence and Risk Assessment – Wealth managers and investment managers conduct in-depth analysis of each opportunity, assessing everything from fund structure and manager track record to legal risks and exit options.
• Suitability and Structuring – Tailoring access to match asset allocation and access to your risk profile, liquidity needs, and tax situation, whether that’s through a feeder fund, an LTAF, or a more bespoke direct deal.

Are Private Markets Right for You: Or Should You Stick to Public Equities?

Private markets are no longer just for institutional investors or those with eight-figure portfolios. Many private clients today, including those with £1–10 million in investable assets, are being introduced to these opportunities through their wealth manager.

But suitability still matters.

How Much Should You Allocate?

Wealth managers typically suggest allocating 5–20% of your portfolio to private markets, depending on:

• Your liquidity needs
• Your investment time horizon
• Your capacity (and appetite) to take on illiquidity and complexity
• Your broader goals, whether it’s income, growth, or legacy planning

Higher allocations may be appropriate for those with long investment horizons and a strong public market core. But for others, even a modest allocation can offer useful diversification and exposure to attractive return streams. There are however some key things to consider before investing:

• Can you lock up part of your capital for 5–10 years?
• Would you benefit from regular income or are you targeting long-term growth?
• Are you prepared for more complex reporting and less frequent valuations?
• Do you have a trusted adviser to guide you through the process?

If you’re asking these questions, you’re in the right place. The landscape is changing, and with the right guidance, private markets may now be a realistic and rewarding part of your portfolio.

What Are the Risks in Private Market Investments: And How Can They Be Managed?

Private markets offer exciting opportunities, but they come with risks that are different from public markets ^[5]. Here’s what to be aware of:

1. Illiquidity

• Most private investments are long term, your capital may be locked up for 5–10 years.
• You can’t usually sell early, so you need to invest money you won’t need access to soon.
• If you are in a trust or fund, the liquidity of the assets within the fund or trust can cause NAV (net-asset-value’s) to differ from actual values.

2. Limited Valuation Transparency

• Unlike shares or bonds, private assets aren’t priced daily ^[6].
• You’ll often receive quarterly or annual valuations, based on internal assessments, not market prices.

3. Complex Structures

• Many private market funds involve more complicated legal and financial terms.
• Understanding fees, liquidity gates, capital calls, and even complex forms of private debt can be difficult without expert help.

4. Varying Quality

• Not all private investments are created equal, and access to top-tier opportunities is limited.
• Lower-quality funds may involve higher risk, weaker governance, or higher fees.

That’s why it’s important to work with a wealth manager who can help you:

• Identify opportunities that match your goals
• Carry out due diligence on fund managers
• Manage risk through thoughtful structuring and diversification

Can I Put My ISAs and Pensions in Private Markets?

At present, most private market investments cannot be held within ISAs or personal pensions in the UK. This is due to their illiquidity, valuation complexity, and regulatory restrictions. For individuals, that generally means investing via general investment accounts, trusts, or company structures, outside of tax-advantaged wrappers.

That said, the landscape is evolving in two key ways:

1. What Your Pension Fund May Do

Government-backed initiatives and allocations by insurance companies like LIFTS (Long-Term Investment for Technology and Science) are encouraging large institutional pension schemes, especially defined contribution (DC) workplace pensions, to allocate capital to UK private markets, such as infrastructure, growth equity, and venture capital ^[7].

This means:

• Your default workplace pension could gradually gain exposure to private markets
• You may benefit from diversified, long-term returns, without having to make an active choice

However, this is being driven at the provider or scheme level, not through individual selection.

2. What You Can Personally Choose

Unlike in the United States, where certain pension structures (like self-directed IRAs or 401(k) plans) allow individuals to allocate to private funds, UK individuals currently can’t choose private market investments within their SIPP or ISA in most cases.

There are some specialist pensions or professional schemes with more flexibility, but they remain niche.

A wealth manager can advise on:

• Alternative structures (e.g. family investment companies, offshore bonds, trusts)
• Tax-efficient wrappers outside of pensions
• How to align private market investments with your broader portfolio and long-term goals

How Does Responsible Investment Work in Private Markets?

Responsible investment in private markets typically refers to integrating environmental, social, and governance (ESG) factors into decision-making, but it goes further than simply screening out sectors. Because private assets are less transparent than public ones, the application of responsible investment often looks different:

Active Ownership and Influence

Private equity managers and venture capital investors often take board seats or hold significant stakes, giving them direct influence over governance, strategy, and sustainability practices.

ESG Due Diligence

Before committing capital, managers perform detailed due diligence on environmental impacts, labour practices, supply chains, and governance risks. This helps avoid reputational and financial pitfalls.

Impact-Oriented Funds

Many private credit, infrastructure, and real asset funds are structured to deliver measurable social or environmental benefits, such as renewable energy projects, affordable housing, or digital inclusion through data centres.

Regulatory Oversight and Standards

Frameworks like the UN Principles for Responsible Investment (UNPRI) or Europe’s Sustainable Finance Disclosure Regulation (SFDR) are increasingly applied to private funds, requiring greater transparency and reporting on sustainability outcomes.

Investor Alignment

Wealth managers act as a professional adviser, helping clients select opportunities that reflect their personal values, whether that means prioritising economic growth with sustainability, targeting impact-driven outcomes, or simply avoiding sectors that conflict with investor goals.

Responsible investment in private markets combines ESG due diligence with active ownership. Unlike public markets, where shareholders are often passive, private investors can drive tangible change, making this one of the most direct ways to align capital with sustainability and long-term value creation.

Opening the Door to Private Markets

Private markets are no longer out of reach. With growing investor demand, evolving regulation, and more wealth managers offering specialist access, it's now possible for a wider range of individuals to explore these once-institutional-only opportunities.

From private equity, real estate investments, and direct lending to LTAFs and co-investments, the options are expanding, but navigating them still requires expertise, planning, and personalisation. The right wealth manager plays a crucial role: not just in unlocking access, but in helping you understand what fits your goals, your liquidity needs, and your overall investment portfolio.

Whether you're seeking growth, diversification, or income, or simply want to understand your options, now is a good time to start the conversation.

Compare leading wealth managers and discover who can help you access private market investments with confidence.