Private Markets Are Going Mass Market. Is That a Good Thing?

Despite being situated a mere 13 miles from Philadelphia’s Independence Hall, Conshohocken, Pa., may strike you as an unlikely locale for a revolution—let alone a financial insurgency. And yet “Conshy” is where executives at Hamilton Lane, an asset manager with $817 billion under management, are fighting to democratize investing.

“The idea of retail investors getting into private equity is a trend that is real and we expect to keep growing,” says Andy Sullivan, head of global investment management at PGIM. To lure ordinary investors, Hamilton Lane and others have addressed liquidity problems , minimum investments, and reporting issues through the creation of what are called evergreen funds. These newfangled vehicles don’t have a fixed end date, so investors can enter or exit more readily—usually on a monthly or quarterly basis. And most evergreen funds have low investment minimums, say $25,000 for accredited investors.

Earlier this year I noted how the number of U.S.-listed public companies had fallen significantly from its 1997 peak. True, the value of equities has increased. For instance, the total market capitalization of Nasdaq-listed stocks has grown from $2.9 trillion in August 2003 to $23.5 trillion today, a respectable 11% annual compound return. But, of course, just seven stocks, according to S&P Global— Apple , Alphabet , Meta Platforms , Microsoft , Nvidia , Amazon.

So on the one hand, you have Joe and Jane Q. Public piling into Nvidia, or meme stocks like AMC or Rush Street Interactive , or dog ETFs like ETFMG Alternative Harvest , or, heaven forbid, short-dated options. And on the other hand, you have institutions and the superwealthy investing in private markets, telling us, “Oh no. You can’t come in here, it’s much too risky,” as they laugh all the way to the bank.Actually, the private-market club is much less exclusive these days.

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