For decades, access to alternative investments like private equity and private credit was largely limited to institutional investors: think pension funds, university endowments, and sovereign wealth funds. These institutions recognized the appeal of non-public market assets: higher return potential, diversification away from traditional equities and bonds, and less exposure to public market volatility. Private equity offered access to the growth of private companies before IPOs or acquisitions, while private credit provided a way to earn strong yields by lending to businesses outside of the traditional banking system.

Historically, the complex structures, high minimum investments, and long lock-up periods of these assets created barriers to entry for individual investors. But today, that landscape is changing. A new wave of retail participation in private markets is emerging, driven by regulatory innovation, technology platforms, and growing investor appetite for alternatives to the traditional 60/40 portfolio.

So, what’s behind this shift?

First, public markets have become increasingly saturated and volatile. In addition, the number of publicly traded U.S. companies has dropped dramatically. Since its peak in 1996, the number of publicly traded U.S. companies has dropped by almost 50 percent from 8,090 to 4,215 in 2024. Many companies now stay private longer, meaning some of the most substantial value creation occurs before they ever go public. These are not small startup companies either. Think SpaceX, Hopper and Canva. Individual investors want a piece of that early-stage growth, and private equity offers a pathway to participate.

Second, yields in traditional fixed income have remained compressed, especially in a low interest rate or inflation-adjusted environment. Private credit, where investors lend directly to businesses, can offer higher income potential, often with senior secured positions in a company’s capital stack. As banks have retrenched from middle-market lending, private lenders have stepped in to fill the gap, creating an attractive opportunity set for investors seeking risk-adjusted returns.

Third, the simplification of finance is making access easier. Fund structures with lower minimums, improved transparency, and semi-liquid options are opening doors for individuals. Fintech platforms and private wealth managers are facilitating broader participation, helping bridge the gap between institutional strategies and individual portfolios.

For clients looking to diversify beyond traditional stocks and bonds, private equity and private credit can serve as powerful complements. While they come with unique risks—such as illiquidity and valuation opacity—their potential for long-term outperformance and income generation is drawing increasing interest from retail investors eager to build more resilient portfolios in a complex market environment.

If you would like to learn more about how this may fit into your portfolio, we are here and would be happy to talk to you about a specific strategy.