As investors navigate the challenges of integrating public and private markets we believe a single, unconstrained multi-asset portfolio can deliver a more efficient and opportunistic solution.

Adding private markets to portfolios has generally been shown to enhance return potential, diversification and overall portfolio efficiency. As investors allocate more to private markets, many are recognizing the challenges that come with combining the management of private and public assets in a genuinely integrated portfolio.

In this paper we discuss how utilising a multi-asset manager to provide such an integrated, unconstrained portfolio has the potential to enhance portfolio construction and risk management, make governance lighter and more cost-efficient, help mitigate the “j-curve” of traditional private markets investing, and encourage a more opportunistic approach to investing along the full liquidity spectrum.

Executive Summary

  • The potential benefits of adding private markets to portfolios from a return, diversification and overall portfolio efficiency perspective are readily apparent.
  • As investments in private markets continue to grow, many allocators are facing newer challenges associated with combining private investment with public within a single portfolio.
  • In this paper, we discuss how using an unconstrained multi-asset approach to gain public-private exposure has the potential to enhance portfolio construction and risk management within a cost-efficient, low governance framework.
  • Furthermore, multi-asset managers may be able to provide a more opportunistic approach to private markets investing when given the broad latitude to invest across the liquidity spectrum, seizing market opportunities and reducing the “j curve” effect of traditional private markets investing.
  • Finally, partnering with an asset manager with extensive resources and specialist capabilities can further the development of investors’ own public-private portfolios, through the sharing of knowledge, ideas and best practices.

Investors Appear Poised To Shift Even Further Toward Alternatives

Proportion of surveyed institutional investors worldwide that are allocating, and plan to increase allocations, to alternative investments

Figure 2: Investors Appear Poised To Shift Even Further Toward Alternatives 

Source: Nuveen, Think Equilibrium 2022 Global Institutional Investor Study. Nuveen and CoreData surveyed 700 asset owners and 100 consultants spanning North America, Europe, the Middle East, Africa and the Asia Pacific region in October and November 2021. Asset owner survey respondents represented organizations with assets of at least $500m, and 55% had assets greater than $10 billion.