What Asset Owners Are Watching for in Private Markets

The universe of investors in private markets is expanding rapidly as investment opportunities and modes of access multiply. Private assets are no longer the preserve of large institutions — they are increasingly being opened to high-net-worth and retail investors through semi-liquid and evergreen vehicles. Yet, as the private markets ecosystem scales and democratizes, so too do the risks, complexities and demands for transparency. 

At MSCI’s recent Institutional Investor Forums held in Sacramento and Toronto, asset owners with decades of experience in private markets shared what’s front of mind for them. Across the broad conversations on liquidity, risk and the convergence between private and public markets, several issues stood out: the untested resilience of private credit, faith in reported valuations, the need for timely data and finding the right benchmarks for performance measurement. Alongside these issues, the impact of AI’s disruption loomed large. (Read the full roundup of the discussions at both events here.) 

Private credit yet to be tested 

Private credit has surged as an asset class because of relatively stable returns and perceived insulation from public-market volatility. But the sector’s explosive growth — and limited track record through a full economic cycle — has left many investors questioning its resilience. 

Unlike traditional bank lending, private credit often operates with limited transparency, bespoke deal structures and less regulatory oversight. The expansion of direct lending, particularly to leveraged middle-market companies, has led to concerns about credit quality, documentation standards and liquidity. (I recently wrote about the need for greater data transparency from general partners (GPs) in private credit.)

The stress test is still to come. Defaults in private credit could rise sharply if weaker borrowers face cash-flow stress. Valuations, underwriting discipline and liquidity remain key unknowns.  

Valuation faith and data timeliness

A recurring theme at both forums was investors’ faith in valuation data — or lack thereof. Several asset owners voiced concern about the upward bias in some GP marks. This skepticism is not new, but it has grown louder. Reservations of limited partners (LPs) could be alleviated by GPs being more transparent on how they are marking their assets, participants suggested, which could also allow better comparisons between managers — and their holdings. 

Another data challenge we discussed was the frequency and timeliness of data — an issue of particular relevance to the new breeds of semi-liquid and evergreen funds in private markets. As MSCI researchers detailed in recent publications, valuations are notoriously slow to emerge. Those lagged timelines don’t meet the needs of the types of funds offering increased liquidity to their investors, who increasingly include retail investors. Participants at this year’s forums, however, confirmed that institutional asset owners too, would benefit from more timely data to facilitate better oversight, monitoring and portfolio management. 

The search for fit-for-purpose benchmarks

Benchmarking private assets remains a fundamental challenge. Some asset owners mentioned they still rely on public-market proxies, conceding that this is not an optimal approach. MSCI’s private-capital benchmarks provide a more precise, asset-specific and peer-relevant foundation for assessing performance. These benchmarks capture vintage effects, capital flows, dispersion and valuation cadence, offering a clearer picture of true portfolio dynamics. 

The AI unknown

As one might imagine, AI featured prominently in the wider discussions at the forums in Sacramento and Toronto because of the massive structural change the technology brings to the way investors put capital to work. But there were also questions raised around whether AI will actually turn out to be a wrecking ball to existing investments. Will an unwinding of the exuberance in public AI valuations pose a threat to private markets — particularly in the technology and venture ecosystems? With billions in private capital tied to AI-related companies, valuation corrections could ripple through the entire private-markets landscape.  

Looking ahead

Private markets are no longer a quiet corner of institutional portfolios — they are a significant component of global investors’ allocations and increasingly on the radar of retail and wealth segments. With growth comes increased demand for transparency, standardization and quality data in what was once an opaque world.  

What I heard time and again at the forums is that investors with decades of experience in private markets will be focused on applying the right benchmarks for their past performance measurement, future performance and risk expectations. And they’ll be watching closely how private credit withstands stress and how valuations recalibrate across private markets as the industry adapts to an era of elevated uncertainty.