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Private Markets Are Becoming Mainstream: What This Shift Means
Sep 15, 2026
Capital is flowing to private markets, creating new opportunities and considerations for a wider range of investors and companies.
Michael Zezas
Co-Head, Morgan Stanley Institute
Jessica Alsford
Co-Head, Morgan Stanley Institute
Why It Matters
- Private markets are becoming a mainstream portfolio allocation as they continue to grow. Private assets under management are expected to reach $26 trillion by 2029, according to Morgan Stanley Research.
- They’re also becoming more accessible to a wider range of investors. Interest and access among institutional and individual investors is increasing, aided by new products and platforms that offer lower investment amounts, greater liquidity and other benefits.
- Semi-liquid evergreen funds are a fast-expanding segment. These funds offer greater flexibility than traditional private market funds, specifically attracting individual investors.
- Private market investments carry their own risks and considerations. These investments may have liquidity limitations, longer-term investment and distribution periods and dispersion in returns and risk.
The Big Picture: Capital is increasingly flowing to private markets. New strategies and platforms are making the space more accessible to a wider range of participants, while expanding how private companies can connect with investors. Understanding investment opportunities and the varieties of structures and vehicles within private markets is key.
For investors, an increasingly important share of the corporate economy now sits outside the public markets. Of roughly 730,000 operating companies in the U.S., only about 4,000—or 0.5%—are publicly listed, according to Morgan Stanley Investment Management. This is not simply a reflection of more companies being created: the number of U.S. public companies has fallen by roughly one-third over the past 20 years. Private companies are a growing economic force and source of innovation: There are more than 1,800 global private companies valued at $1 billion+, worth an aggregate $8.9 trillion, Morgan Stanley Research recently noted.
At the same time, companies are staying private longer, supported by greater access to private capital that allows them to grow and help create value well before an IPO. The movement goes in both directions: private equity take-private activity last year was the second highest of the past decade, according to Morgan Stanley Investment Banking. Public markets increasingly represent only part of the opportunity set for investors. Indeed, among companies generating $100 million or more in revenue, 84% are private.
“Private markets have moved from the margins of portfolio construction to the center of the conversation,” Dennis McCabe, Managing Director and Head of Alternative Investment Distribution, recently said.
As private markets open to a broader range of investors, how should they navigate the growing array of strategies and investment structures?
1. Access and interest among investors is expanding.
Private markets were previously a focus of institutional investors and high-net worth individuals. However, growing interest in alternative investment strategies – including private equity funds, private credit funds, interval funds, real estate funds, infrastructure funds and hedge funds – has led to the “democratizing” of the space with new products designed to provide exposure for investors, including individuals.
Private markets assets under management made up an estimated 11% of $135 trillion of global AUM in 2024. This percentage is expected to increase to 13% of $200 trillion of global AUM, or $26 trillion, in 2029, according to Morgan Stanley Research.
“Sophisticated alternative investment strategies, long used by institutional and ultra-wealthy investors, are now more broadly available to eligible investors through vehicles such as registered funds and evergreen structures that offer greater liquidity, lower eligibility thresholds and reduced minimums,” writes Alison Nest, Head of Investment Solutions Products at Morgan Stanley Wealth Management.
Recent market volatility and its effects on traditional stock and bond portfolios; a growing shift of capital to private markets; and an expanding range of products and vehicles are driving demand for alternatives.
2. Semi-liquid evergreen funds are a fast-growing vehicle for both individual and institutional investors to access private markets.
Traditional private market drawdown funds typically require investors to make sizable capital commitments upfront, with that capital called and invested gradually over several years and returned as investments are realized. These funds also generally offer limited liquidity during their life. Semi-liquid evergreen funds can provide a more flexible alternative, often with lower investment minimums, capital invested more quickly and periodic opportunities for redemption. These features have helped broaden access to private markets beyond institutional investors, particularly among individual investors, who are driving significant growth in the semi-liquid market.
“These funds tend to offer some of the same benefits as drawdown funds—diversification and attractive returns—but with easier access through immediate exposure to a diversified portfolio of companies, lower investment minimums, periodic liquidity, simplified tax reporting and no ongoing capital calls,” Dan Picard, Head of Alternative Products and Co-Head of Strategy at Morgan Stanley Investment Management, recently highlighted.
As of year-end 2025, U.S. semi-liquid evergreen funds held $457 billion in net assets under management across 486 funds, and over half of the funds have launched in the past four years.
When looking at semi-liquid funds, investors also need to consider different return implications, risk profiles and redemption mechanisms.
3. Recent unpredictability and uncertainty around private credit underscores the longer-term characteristics of private market investments.
Unpredictability in markets and investor concerns around redemptions underscore that private markets present their own risks and considerations. But these characteristics are becoming better understood, within the context of the longer-term nature of these investments.
“We continue to see durable demand across infrastructure, PE, and secondaries despite private credit headlines and elevated business development company redemption requests in the private wealth channel,” said Michael Cyprys of Morgan Stanley Research. “We see capital rotating out of the direct lending BDC space into other areas of the private markets that offer compelling return opportunities. Overall, we view the dynamic as cyclical rather than structural, with flows in the BDC space likely stabilizing and rebounding as performance improves.”
Private credit stress was concentrated in limited areas, according to Morgan Stanley Investment Management. “The first half of 2026 proved more unpredictable than many investors anticipated, yet it also reinforced several attributes that have made private credit an increasingly important allocation,” David N. Miller, Global Head of Private Credit & Equity, and Tim Clarke of Morgan Stanley Investment Management recently wrote in a midyear outlook. “In our view, forward return potential is more attractive today than it was at the start of the year, supported by wider spreads, stable borrower fundamentals and growing financing demand.”
More broadly, capital is also moving into private infrastructure, secondaries, asset-based finance, opportunistic credit, hedge funds and private equity buyouts, as Morgan Stanley Wealth Management highlighted in its six key alternative investment themes this year.
4. For private companies, there are more sources of capital and structures available – and more variables to assess.
The expansion of private markets gives private companies across industries more flexibility and choice in how they raise capital, provide liquidity and manage ownership. Access to a broader set of investors, a deeper pool of capital and various investment structures creates new considerations for private and public companies alike. There are options for capital structure, financing, transaction timelines, strategic partners and full company sales.
In recent months, Morgan Stanley Investment Banking and Global Capital Markets teams have advised companies across almost every industry, including spaces as diverse as artificial intelligence, aerospace and defense and hospitality, to match company needs with the appropriate and interested pools of capital.
And as more investors look for private markets exposure, private companies and shareholders seeking liquidity have new opportunities. Morgan Stanley’s acquisition of EquityZen earlier this year, for example, scales how private company shareholders are able to connect with a growing number of investors. For private companies, the EquityZen platform enables a more streamlined pathway to liquidity for employees and shareholders, while simplifying processes and broadening access to a wider audience of investors through offerings for accredited investors with low minimums.
Takeaways
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For Investors:“Given so many of the fastest growing and most disruptive companies are private, it’s important to consider: Does your portfolio have the appropriate exposure, and do you have the resources or tools to access the most attractive opportunities either directly or through funds?”
Michael Gaviser, Managing Director, Head of Private Markets & Portfolio Solutions, Morgan Stanley Wealth Management
“Are we letting perfect be the enemy of good? The more important question is not whether investors pick the perfect private stocks, but whether they have meaningful exposure to the innovation emerging from late-stage private companies. In today’s market, getting allocation off of zero has never mattered more.”
Atish Davda, Head of Morgan Stanley Wealth Management Private Markets & EquityZen
“The key question is not simply how much to allocate, but whether the expected return premium adequately compensates investors for the risks and constraints associated with private assets. Manager selection and fund due diligence are especially important given the significant dispersion in outcomes. Access to high-quality opportunities, combined with rigorous due diligence and manager selection, can be a meaningful differentiator for investors.”
Alison Nest, Head of Investment Solutions Products, Morgan Stanley Wealth Management
“The real question isn’t whether private markets matter. It’s whether one’s portfolio is keeping pace with a world where more companies, more capital and more value creation are occurring outside the public markets.”
Rui de Figueiredo, Global Head of Investment and Client Solutions and CIO of the Solutions and Multi Asset Group, Morgan Stanley Investment Management
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For Companies:“Private markets have become a dynamic landscape that is no longer reserved for pre-IPO growth tech companies. Rather, primary and secondary capital raises, minority and change of control transactions, and solutions-oriented activity are occurring across industries. Today, owners can explore capital and liquidity in ways that have not been available until the last couple years.”
Andrew Wetenhall, Managing Director, Deputy Head of Investment Banking
“As capital needs to fund growth and shareholder liquidity continue to expand, companies should approach the private markets with confidence in their ability to deliver core objectives historically reserved for the public markets. With that in mind, the question companies should be asking is whether private markets should be considered a core venue alongside traditional liquidity options, such as an IPO or company sale, when determining the optimal and most efficient way to source capital. Increasingly, these options are being assessed simultaneously.”
Russell Schmidt, Managing Director, Head of Alternative Capital Solutions
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