Karsten-Dirk Steffens: «Private Markets – Not Without Obstacles»

Private equity, venture capital, infrastructure, and private debt – for decades, private markets have been the domain of institutional investors. For individual investors, these markets have remained largely inaccessible. Yet demand is growing, and first opportunities are emerging. That said, a closer look is warranted.

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The most obvious reason why individual investors have historically had limited access to private markets is the high minimum investment requirements – often in the hundreds of thousands of Swiss francs.

This barrier alone excludes a majority of retail investors. In addition, private market funds are characterized by long capital lock-up periods, limited liquidity, redemption restrictions, and complex structures that demand a high level of financial sophistication.

Unlike listed equities or ETFs, which can be traded daily, private market investments often tie up capital for years. Early redemptions are either impossible or come with steep discounts. In short: investors must be prepared for long-term commitment and be able to bear the associated risks.

«Investors may find themselves making decisions based on incomplete or inaccessible information.»

Another hurdle is transparency. While public companies are subject to extensive disclosure requirements, data on private firms is often scarce. Valuations aren’t updated daily, and performance reports can be opaque or difficult to compare.

As a result, investors may find themselves making decisions based on incomplete or inaccessible information. A further issue is the lack of standardized investment vehicles. Whereas ETFs and mutual funds are widely available and regulated, many private market products still operate in a gray area between institutional-only offerings and niche strategies.

«Private assets have delivered superior returns relative to listed markets.» 

Despite these challenges, private markets offer compelling advantages for individual investors:

• Portfolio diversification: Due to their low correlation with traditional asset classes, private market investments can reduce overall portfolio volatility and risk.
• Potential for higher returns: Historically, private assets have delivered superior returns relative to listed markets.
• Access to unique opportunities: Private markets allow investors to gain exposure to high-growth companies, emerging technologies, and infrastructure projects not available on public exchanges.
• Long-term capital appreciation: With their multi-year investment horizon, private assets can support long-term wealth accumulation.
• Alignment with ESG and impact goals: Private investments often provide more targeted opportunities to align capital with personal values and sustainability goals.

«So-called evergreen structures are changing the game.»

To address growing demand, several banks and asset managers are beginning to launch purpose-built private market solutions for high-net-worth individuals. Aberdeen Investments, for example, offers an illustrative case of how access is evolving.

So-called evergreen structures are changing the game. By offering lower minimum investments and quarterly liquidity, they make private markets more accessible. Unlike closed-end funds, evergreen funds invest in existing portfolios, which enables investors to benefit from diversification and existing performance history from day one.

Led by Nalaka Da Silva, Aberdeen’s team has developed a strategy underpinning the Global Private Markets Fund that enables individual investors to access over 3,000 private companies and projects. This fully diversified approach spans private equity, infrastructure, real estate, private credit, and natural resources. 

«What is still considered a niche today could soon become a mainstream component of private portfolios.»

Access to private markets is no longer reserved for institutions – the doors are starting to open. For individual investors, this shift brings new return potential and diversification benefits, provided they possess the necessary capital, patience, and understanding. However, caution remains imperative, as product complexity, liquidity constraints, and limited transparency constitute significant risks.

The democratization of private market investing is underway – and accelerating. With regulatory reforms, technological innovation, and increasing demand, the scope of access is expected to broaden significantly. What is still considered a niche today could soon become a mainstream component of private portfolios.

Karsten-Dirk Steffens is Country Head Aberdeen Investments Schweiz.

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