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Jun 9, 2022
With volatility shaking up public capital markets, many investors looking to deploy capital feel as though they’re trying to catch a falling knife. Institutional investors watching value stocks fluctuate like growth stocks are using the opportunity to look into private market funds. And for good reason. Recently, Oliver Wyman and Morgan Stanley estimated that private market funds will reach $13 trillion in assets under management (AUM) by 2025.
Private Market Value Creation
Three key factors are driving this transition: most value creation happens when companies are private; more companies are staying private longer; and the intra-day volatility of trading private equity remains low compared to public equities. This sets up private market funds favorably.
Private equity has outperformed public market benchmarks for years. And private equity is just one slice of the broader private capital markets ecosystem. As private markets continue to expand, institutional preferences can be expected to shift as well. With current private market estimates reaching $4.9 trillion in AUM – some $8 trillion less than Morgan Stanley’s 2025 estimates – the opportunities for growth are striking.
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