(FLASH FRIDAY is a weekly content series looking at the past, present and future of capital markets trading and technology. FLASH FRIDAY is sponsored by Instinet, a Nomura company.)
Your friendly neighborhood Traders Magazine editor is old enough to remember when private assets meant owning baseball cards. You’d keep them in a box under your bed or in the closet and hope they appreciated in value. (Only to find years later most cards were worth three cents each according to a price guide, but there were no buyers at that price.)
Or, for wealthy folks, art would be the private asset of choice.
Things changed over the years and private markets advanced. In the 2010s there was increased interest in buying into firms before they went public. But it was still a niche corner of the markets with high barriers to entry. For instance, consider the state of play as described in the 2013 article 3 ways to buy Twitter before the IPO:
“Twitter is not yet public, but that doesn’t mean there aren’t shares of the company floating around out there, populating the ‘high-growth’ sections of investment portfolios. Twitter, and pretty much every other company under the sun, will issue various forms of equity while still a private company, either as compensation to employees, payment for an acquisition or to large private investors. These are sometimes laden with so many terms and conditions of sale that they are frozen solid for months or even years, but sometimes they are able to be traded, albeit in what would be considered an illiquid market.”
So basically you could buy and sell private-company shares on platforms such as SecondMarket (now Nasdaq Private Market) and SharesPost (now part of Forge Global), or invest in private firms indirectly via private equity firms or certain mutual funds. Either way, it was an expensive and inefficient process.
Private markets have developed over the past dozen years and there has been a surge in recent interest to make the asset class more accessible to regular folks. Last month, President Trump signed an executive order to make it easier for 401(k) plans to include alternative assets such as private equity.
The upshot seems to be that private markets are transitioning from niche to mainstream, with some household financial brands getting involved. For instance, BlackRock is set to include private assets in its retirement plans, and Goldman Sachs and T. Rowe Price are collaborating on investments that include private markets.
Why the recent spike in interest in private assets? That’s a point of curiosity. The apparent answer seems to be simple: investment returns.
Demand for private assets “mostly comes from a return story,” Morningstar Research Services’ Jack Shannon said in a January 2025 podcast. “So I think over the last decade, you’ve seen in the press, the financial press, a lot of discussion about how great private equity and venture capital has been for … university endowments and for pension funds. And I think people see that and say … hey, how come these big institutions and these high-net-worth credit investors have access to something, this great asset class that I don’t have access to?”
However, it’s not all sunshine and rainbows.
For one, chasing returns is never a good thing. So while private assets may have outperformed over the past decade, there’s no assurance that will continue in the next decade.
Two, there’s an inherent conflict with private assets: companies often want to stay private to avoid the disclosure and reporting requirements of being a public company. But that disclosure and reporting is helpful, maybe even necessary, for retail investors to stay informed.
Even just one private-company blowup stemming from a ‘black box’ situation that burns mom and pop investors could undo years of progress.
So while private assets can help investors diversify and increase returns, it’s worth considering whether there’s some irrational exuberance around the asset class at present.
