The number of US companies listed on big US exchanges peaked back in 1996 at 7,300: it now stands at about 4,300. Photograph: Angela Weiss/ AFP via Getty
“The reality is that private markets are where the vast majority of global wealth is – and the private person has been locked out of that. But it’s beginning to open up,” says Merriman.So what are these markets all about? And if targeted at institutions and the very wealthy, how much will you need to get in on the action?Globally, investment in these unregulated markets is on the rise. Figures from McKinsey show that private market assets under management stood at about $13.
Meanwhile, the World Economic Forum suggests that a recent revamp of the European Long-Term Investment Fund framework, for example, could open private markets – with some caveats – to everyday investors.A Nvidia chip: Microsoft and Nvidia account for almost 15 per cent of the S&P 500. Photograph: AFP via Getty
This means that “a traditional mix of bonds and equities are not set up for success going forward”, says Merriman, arguing that a traditional 60:40 equity-to-bond split no longer represents an ideal portfolio.“If you’re allocating just to stocks and bonds, you’re relying on luck. You think you’re diversified, but you’re actually not.
Liquidity, for example. As the recent report from the WEF pointed out: “Private markets can indeed be more opaque and less accessible than public markets, often including long lock-up periods for investment.” One of Elkstone’s recent private market deals is its partnership with alternative asset manager Harrison Street to develop more than 1,500 student accommodation beds in Dublin, Limerick, Cork and Galway in the next five years.
That is still beyond the means of many, but he can see the level of required investment coming down. And he says the State could play a role in this.