A 60/40 portfolio of stocks and bonds has long been considered the gold standard, offering predictable returns during periods of stable inflation, and limited access to alternatives.

However, with persistent inflation, increased market volatility, and growing access to private markets, the investor landscape has fundamentally shifted.

At Manhattan West, we believe that portfolios must evolve to meet modern financial challenges. We bring institutional caliber private investments into our clients’ traditional portfolios, creating a more resilient, return-focused strategy for the decades to come.

The Shift:

In the past, private equity and venture capital investments were accessible only to large institutions, endowments, and ultra-high-net-worth investors. Now, there is greater accessibility for accredited investors through feeder funds and interval funds, driven by regulatory and technological advances.

In order to collectively invest in larger institutional funds like a major private equity or venture capital fund, feeder funds are created to allow accredited investors to pool their investments together. Typically, minimums are very high, usually in the millions, but by using feeder funds, the minimum can be reduced to as little as 100k.

A wealth management firm or a fund platform acts as a third-party sponsor for the feeder fund and handles administrative duties, including fund creation, investor onboarding, and reporting. Feeder funds help investors gain exposure to institutional-quality strategies without needing an institutional-sized capital contribution.

Interval funds, on the other hand, are SEC-registered, closed-end funds that invest in private market strategies while offering periodic liquidity. Investors can buy shares similar to mutual funds, often with minimal to no performance-based fees. The fund manager allocates capital to private assets over time, and depending on the fund’s structure, accreditation may not be required. Unlike traditional PE funds that typically have a 7 to 10 year freeze period, interval funds may offer periodic liquidity. Lastly, Interval funds have greater transparency and regulatory oversight from the SEC.

Why Should You Include Private Markets in Your Portfolio

Private markets have grown into a vital component of modern portfolio construction, offering exposure to companies and sectors beyond the reach of public exchanges. By thoughtfully integrating these assets, investors can unlock new performance drivers and balance overall risk.
Private assets’ unique benefits that can enhance overall portfolio performance:

  • Higher Return Potential: The historical performance of private equity and venture capital has exceeded that of traditional public markets.
  • Diversification Benefits: Private assets often have a lower correlation to public markets and can reduce overall portfolio risk.
  • Stability in Volatile Markets: Due to less frequent pricing and long-term investments, private assets can smooth portfolio volatility and reduce emotional decision-making during market downturns.

Critical Considerations for Private Market Investing:

Investing in private markets can be rewarding, but it is not without complexity. These investments require patience, a long-term mindset, and a deep understanding of the structures and risks involved.

Before committing capital, it’s important to consider the following key challenges:

  • Illiquidity: Your capital is locked for extended periods of time with limited redemption windows. Private market investments are best suited for long-term strategies.
  • Opaque Valuation Cycles: Private markets are not priced daily like public stocks. Investors must trust and accept the periodic valuation that relies on internal assessments.
  • Manager Dispersion: Your performance can vary significantly based on your management selection. Your manager’s individual strengths, skills, and strategy can significantly impact your overall outcomes. Thorough due diligence and careful manager selection are critical.

The Role of an Advisor

Modern advisors curate access for their clients by filtering investments that meet the investor’s overall goals and timelines and removing investments that do not. By blending liquidity and performance, advisors can construct a “hybrid” portfolio and better meet their investors’ overall needs.

Conclusion

Modern advisors are reshaping the investment landscape by thoughtfully integrating private markets into diversified portfolios. This approach strikes a balance between liquidity and long-term performance while opening access to opportunities once reserved for large institutions.

By incorporating private assets into traditional frameworks, advisors and investors can build greater resilience through market cycles and capture higher returns.

The future of wealth management is clear: institutional access delivered with personalized insight.

Advisors who embrace this model aren’t just adapting, they are redefining what is possible for the next generation of investors.