In 2022, financial advisors increasingly turned to alternative investments as public markets experienced historic losses. The S&P 500 fell over 18 percent in 2022, while bonds, measured by the Vanguard Total Bond Index, dropped 13.3 percent—the steepest U.S. fixed-income decline in history, according to InvestmentNews. Private equity and other alternatives gained traction as advisors sought to mitigate client losses.
The public market rebound has been dramatic, with the S&P 500 up 26 percent in 2023 and poised for nearly 30 percent growth in 2024. Bond yields, such as the 10-Year Treasury at 4.4 percent, remain attractive.
This recovery has prompted advisors to reconsider private investments. Josh Strange, founder and president of Good Life NOVA, has shifted back to equities and flexible bond strategies, focusing on tax mitigation rather than performance enhancement. Joseph Spada of Summit Financial told InvestmentNews that he remains committed to private allocations, believing in their ability to enhance long-term performance and manage risk through diversified holdings in private real estate, equity, and credit.
Some experts see 2025 as ripe for targeting private investment opportunities. Brian Storey of Brinker Capital Investments highlights undervalued commercial real estate and the energy sector as promising space, given the likelihood of a more favorable regulatory environment. Similarly, Brent Coggins of Triad Wealth Partners foresees favorable conditions for private assets, including private credit, citing higher expected economic growth and robust real yields.
Private equity secondaries also present opportunities, say Erick Rawlings of Fiduciary Trust International, noting discounts created by high interest rates and a slow IPO market. Patrick McGowan of Sanctuary Wealth Group advises a balanced approach, favoring stable sectors like real estate credit and infrastructure while being cautious with direct real estate equity investments due to rate sensitivity.
As public markets thrive, advisors must weigh the role of private investments in client portfolios. While some prioritize traditional assets, others maintain or even increase allocations to alternatives, seeing them as essential for diversification and long-term value. According to InvestmentNews, the outlook for private markets in 2025 appears nuanced, with opportunities for discerning investors who can navigate the complexities of both public and private assets.
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