Why Private Assets Are Essential to Diversify Your Investment Portfolio
- Jan 20
- 2 min read
Did you know that more than 95% of companies worldwide are not publicly listed? Yet, most investors still concentrate their portfolios on public markets. This approach overlooks a major opportunity: private assets.
What Are Private Assets?
Private assets include several types of investments that are not traded on public stock exchanges:
Private equity: investing in privately held companies to support their growth.
Private debt: providing direct loans to companies or specific projects.
Infrastructure: financing long-term projects such as roads, renewable energy, or utilities.
Private real estate: property investments held directly or through private funds.
What do these assets have in common? They directly finance the real economy, supporting businesses and tangible projects rather than merely tracking stock market fluctuations.
Why Invest in Private Assets Today?
Public markets have become:
Highly volatile, with rapid and sometimes unpredictable price movements.
Highly correlated, limiting the benefits of diversification.
Less transparent in the long term, making financial planning more complex.
By contrast, private assets offer a different way to create value:
Business growth potential: participate in the expansion of innovative companies.
Stable contractual cash flows: certain investments, such as private debt, can generate regular income.
Long-term investment horizon: well suited for patient investors seeking resilience and sustainable performance.
How Private Assets Enhance Portfolio Diversification
Allocating 15% to 25% of private assets within a portfolio can:
Reduce overall risk through broader diversification.
Improve resilience during public market downturns.
Enhance long-term performance through stable and productive investments.
Understanding the Risks and Opportunities
Like any investment, private assets involve specific risks:
Lower liquidity: assets cannot always be sold quickly.
Longer time horizon: performance is typically realized over several years.
Opportunity selection: choosing the right funds or projects is critical.
However, with a well-structured strategy, private assets can become a core pillar of a balanced wealth allocation.
Conclusion: Why You Shouldn’t Overlook Private Assets
Private assets represent a vital part of the global economy and offer unique opportunities for portfolio diversification. By understanding how they work, managing their risks, and integrating them thoughtfully into an investment strategy, investors can improve long-term performance while directly supporting the real economy.
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