PRIVATE MARKETS UNLOCKED: THE CASE FOR A MULTI-ASSET APPROACH

Private markets are playing a growing role in portfolio construction. Explore how a single, multi-asset approach brings together private equity, private credit and private real assets in one diversified allocation.

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Abstract blue and gold discs representing a diversified multi-asset private markets allocation.
Why Private Markets Private Markets Building Blocks Case for Multi-Asset Potential Benefits

A COORDINATED APPROACH TO PRIVATE MARKETS

Given the variety and complexity across private markets, building allocations for client portfolios can present unique challenges. Private Markets Unlocked: The Case for a Multi-Asset Approach explores how a direct multi-asset framework can bring together private equity, private credit and private real assets in a single allocation, combining diversified exposure with the flexibility to adjust positioning as relative opportunities and market conditions evolve.

 

KEY TAKEAWAYS:

  • Private markets are becoming a more strategic portfolio allocation. Private markets represent a significant and growing part of the investment opportunity set, while offering differentiated sources of return and diversification beyond public markets.1 For advisors, this expanding universe can provide additional flexibility in constructing portfolios across a broader range of market opportunities.
  • A multi-asset structure brings together complementary return drivers. Private equity can provide long-term growth potential, private credit can contribute income, and private real assets can offer income, inflation sensitivity and diversification. Combining these distinct exposures within a coordinated allocation can broaden the sources of return and risk across a private markets portfolio.
  • Flexibility can help investors navigate evolving private market opportunities. Rather than maintaining static allocations across private asset classes, a flexible multi-asset approach can adjust exposures as relative opportunities and market conditions evolve. This places greater emphasis on a manager’s ability to evaluate opportunities across asset classes, market cycles and investment structures.
  • Implementation may matter as much as allocation. A direct investment framework may offer fewer layers of fees, greater transparency and more control over portfolio construction compared with a fund-of-funds structure. These differences can influence how investors evaluate costs, liquidity, portfolio exposures and the overall investment experience.
  • Putting private markets to work. A multi-asset private markets allocation can be considered within the context of the broader portfolio, alongside traditional stocks and bonds. The paper includes a hypothetical historical analysis of how selected model allocations to private markets would have affected portfolio returns, downside capture and ending values.

 

WHY PRIVATE MARKETS, WHY NOW?

GROWING DEMAND FOR GLOBAL PRIVATE MARKETS
  • Private markets are becoming a larger part of the global investment opportunity set, providing access beyond traditional public markets.
  • Expanding access and investment structures are broadening participation in private markets.
  • Opportunities span private equity, private credit, real estate, infrastructure and other private assets.
  • Global private market assets under management plus dry powder (committed but not yet invested capital) grew from roughly $5.5 trillion in 2015 to roughly $16.7 trillion as of 3Q 2025. PitchBook projects they will reach $26.7 trillion by 2030.
Private markets chart showing assets and dry powder from 2015 to Q3 2025, with their combined value rising from $5,506 to $16,688.” The image is unchanged, and no changes were made in AEM.
Source: PitchBook. “2030 Private Market Horizons,” May 1, 2026. The 2030 figure reflects a third-party forecast based on assumptions that may change; actual results may differ and the forecast may not be realized.

THE BUILDING BLOCKS OF PRIVATE MARKETS​

Different sources of opportunity across private markets​

Private markets span a diverse set of strategies, each with distinct characteristics and potential roles in a portfolio. Private equity, private credit and private real assets, such as private real estate and infrastructure, each offer distinct sources of return and exposure to different market dynamics. Understanding these differences can help inform how the strategies may work together within a broader private markets allocation.​

Private Equity​

  • Growth​
  • Operational value creation​
  • Long-term capital appreciation​

Private Credit​

  • Income​
  • Floating-rate exposure​
  • Structural protections​

Private Real Estate​

  • Income and appreciation​
  • Potential inflation hedge​
  • Property and sector selectivity​

Infrastructure

  • Contractual or regulated revenues​
  • Potential inflation sensitivity​
  • Long-term structural demand​

THE CASE FOR A MULTI-ASSET APPROACH

PRIVATE ASSET CLASS RETURNS BY YEAR

Private markets encompass a diverse set of opportunities, each with distinct return drivers, risk characteristics and sensitivities to market conditions. Historical performance has varied across private equity, direct lending, private real estate, and private infrastructure, illustrating the distinct performance patterns of each asset class and the potential diversification benefits of a multi-asset approach.

2016

  1. Direct Lending11.2
  2. Multi-Asset9.4
  3. Private Equity9.1
  4. Private Real Estate8.0
  5. Private Infrastructure7.9

2017

  1. Private Equity20.4
  2. Private Infrastructure17.0
  3. Multi-Asset13.6
  4. Direct Lending8.6
  5. Private Real Estate7.0

2018

  1. Private Equity12.1
  2. Multi-Asset9.3
  3. Private Infrastructure8.7
  4. Direct Lending8.1
  5. Private Real Estate6.7

2019

  1. Private Equity17.4
  2. Multi-Asset11.2
  3. Direct Lending9.0
  4. Private Infrastructure7.9
  5. Private Real Estate6.4

2020

  1. Private Equity33.5
  2. Multi-Asset14.3
  3. Private Infrastructure8.2
  4. Direct Lending5.5
  5. Private Real Estate1.6

2021

  1. Private Equity40.2
  2. Multi-Asset22.5
  3. Private Real Estate17.7
  4. Private Infrastructure13.5
  5. Direct Lending12.8

2022

  1. Private Infrastructure9.5
  2. Direct Lending6.3
  3. Private Real Estate5.5
  4. Multi-Asset1.7
  5. Private Equity-8.4

2023

  1. Direct Lending12.1
  2. Private Infrastructure8.5
  3. Multi-Asset6.0
  4. Private Equity5.9
  5. Private Real Estate-7.9

2024

  1. Direct Lending11.3
  2. Multi-Asset6.8
  3. Private Infrastructure6.6
  4. Private Equity5.8
  5. Private Real Estate0.4

2025

  1. Private Equity13.3
  2. Private Infrastructure12.8
  3. Multi-Asset10.4
  4. Direct Lending9.3
  5. Private Real Estate5.0

Source: Morningstar, Cliffwater, NCREIF and MSCI as of 12/31/2025. Private Equity: MSCI Burgiss Global Private Equity Index; Private Infrastructure: MSCI Burgiss Infrastructure Index; Direct Lending: Cliffwater Direct Lending Index; Private Real Estate: NCREIF Property Index; Multi-Asset: 33% MSCI Burgiss Global Private Equity Index, 33% Cliffwater Direct Lending Index, 16.7% MSCI Burgiss Infrastructure Index, 16.7% NCREIF Property Index. Investors cannot invest directly in an index. Past performance does not guarantee future results.

PORTFOLIO BENEFITS OF A MULTI-ASSET APPROACH

COMPLEMENTARY STRATEGIES WORKING TOGETHER

The case for a multi-asset approach extends beyond simply combining multiple private asset classes. Private equity, private credit and private real assets can play distinct but complementary roles within a portfolio, offering the potential for diversification, return potential and greater resilience across changing market environments, relative to a single-asset-class approach.1

Diversification

  • Multiple asset classes and strategies
  • Broader sector and geographic exposure
  • Diversification across managers and vintages

Return Potential

  • Multiple sources of return
  • Access to differentiated opportunity        sets
  • Flexibility to respond to relative value

Resilience

  • Diversified economic and market drivers
  • Blend of income and growth-oriented exposures
  • Potential to navigate varying markets

TAKE A CLOSER LOOK AT THE MULTI-ASSET OPPORTUNITY

Private markets offer access to distinct sources of growth, income and diversification, but constructing the allocation matters. Explore the full report for a deeper look at how private equity, private credit and private real assets can work together, how allocations may adapt as opportunities evolve, and the considerations that can shape a multi-asset implementation framework.

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For Financial Professional Use Only; Not for Public Distribution

¹ Private investments are generally illiquid, may use leverage, involve valuation risk and typically carry higher fees than public investments, and may not be suitable for all investors. Diversification does not ensure a profit or protect against loss. The benefits of private-market and multi-asset approaches will vary based on portfolio construction, investment selection, fees, liquidity, and implementation, and may not be realized in all market environments.

This information is for illustrative purposes only and is not an offer or solicitation where prohibited. Certain information has been obtained from sources that PGIM believes to be reliable as of the date presented; however, PGIM does not guarantee its accuracy or completeness. Information may be changed without notice, and PGIM has no obligation to update it. The information is provided with the understanding that, as a financial professional, you will understand and accept the inherent limitations of illustrations presented herein and will not rely on them in making an investment decision. Any forward-looking statements, including projections or forecasts, are subject to change without notice and are not guarantees of future results. 

PGIM and its affiliates may develop and publish research that is independent of and different from the information contained herein.

Prudential Financial, Inc. (PFI) of the United States is not affiliated in any manner with Prudential plc, incorporated in the United Kingdom, or with Prudential Assurance Company, a subsidiary of M&G plc, incorporated in the United Kingdom.

© 2026 Prudential Financial, Inc. (PFI) and its related entities. All rights reserved. 

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