Retail boom in alternative assets: Risk, liquidity and portfolios

A version of this article appeared in CNBC’s Inside Alts newsletter, a guide to the fast-growing world of alternative investments, from private equity and private credit to hedge funds and venture capital. Sign up to receive future editions, straight to your inbox.

The number of public companies has been shrinking, sending investors looking for diversification in the private markets. But as the lines become blurred between public and private markets, do the potential benefits outweigh the risks? 

CNBC’s 15th annual Delivering Alpha investor summit last month brought together some of the biggest names in investing to answer some of the top questions surrounding the alternatives industry.  

Here are the highlights from our conversations with General Atlantic Chairman and CEO Bill Ford, Coatue Management founder and portfolio manager Philippe Laffont, Ares Management co-founder and CEO Michael Arougheti, and JPMorgan Asset & Wealth Management CEO Mary Erdoes. The comments are edited for clarity and length. 

Ford: I really believe right now that the people driving the change in AI are the large, public tech companies, and I think incumbents have that advantage. So, if you don’t understand what Oracle is doing, what Google is doing, what Microsoft is doing, you really can’t invest in the private market. You really can’t make good decisions. So even if we’re not making investment decisions on the public side, we have to be pretty fully aware of what they’re doing and that’s how we synthesize it into our decision-making. 

Laffont: We do everything from seed to privates to publics. On one hand, you could say, OK, maybe we’re at an advantage, because we know both about publics and privates. But on the other hand, the mindset to invest in publics and privates is different. 

On the public side, it’s not only [that] you have to believe in the future, but you have to think, is it already priced in or not? Like when Oracle goes from [$50 per share] to $350, at $350 it’s like, maybe the idea is already priced [in] and on the private side, because usually things take longer, you have to be more right, you have to be more patient. You have to be active in your companies, you have to support the founders or the CEOs a lot.

So I would say that if you can do both, great, but they’re definitely different skill sets. Sometimes I wish I was only in one or the other. Sometimes I’m happy to be involved in both.

Ford: The nice thing about private is … I think this tech cycle plays out over a longer period of time. And I think there is a duration that you get from being a private investor — more of a 5-to-7-year horizon — that allows you to play the cycle a little bit longer.

Sometimes the public markets are more demanding for shorter-term performance.

Laffont: I personally think that the IPO market is totally broken – like beyond repair, as measured by the fact that 20 or 30 years ago, there were so many more IPOs than today. Today, there’s very few IPOs. We were talking earlier this year, there’s been almost none. And I think it’s not a great trend, because at the end of the day, it’s just easier for [the] retail investor to be involved in IPOs and then onwards than everything before the IPO. So I find it’s a little bit unfair.

I do think that it’s going to get fixed purely through competition more than through regulatory action, because when private assets get tokenized, the byproduct of being tokenized is you, in essence, become public, because now you could trade at a premium to the price of the token, you could trade at a discount to whatever the token price was issued. And so all these people that are tokenizing private assets, in essence, it’s making them public. And so I think that one day, maybe all assets are going to be public and tradable.

Ford: I’m a little more optimistic about the IPO market. I think we’ve had an exit recession in private markets for the last three-plus years, and some of that was regulatory, some of it was just some of the trends that Philippe was talking about. But I think we started to see some green shoots around the IPO market this year, and it was just unfortunate that the wind was taken out of our sails a little bit when we had the government shutdown.

There were a lot of high-quality companies on file, ready to go, that would have gone public in Q4 [and] I think build some momentum going into ’26. That got stunted.

I think it will come back in ’26. I think … while the balance may have shifted toward privates, I think there’s a desire among public investors to have high-quality companies come public.