The CFA Institute Research and Policy Center recently published the first report in a series of new comprehensive researches that focus on the accelerated growth of private markets and the multiple ways they are Quite a bit reshaping capital formation, market transparency, valuation methods, investor protection, and investment industry standards.
The first report titled, Understanding the Growth of Private Markets: Structural Shifts in the Investment Industry, defines the structural elements responsible for the growth of private markets and identifies major issues that investment professionals, regulators, and policymakers will face as these markets develop further.
Private markets such as private equity, private credit, real estate, infrastructure, and venture capital currently total more than $18 trillion in global assets under management. With companies staying private for longer, the share of corporate financing, credit creation, and restructuring activities occurring away from public markets is increasing. At the same time, the recent IPOs of large companies have highlighted that a lot of the growth and capital raising of these companies happen before they actually go public.
Rhodri Preece, CFA, Senior Head of Research at CFA Institute Research and Policy Center and co-author of the report, said: “The investment industry is at an inflection point. Recent high-profile IPOs illustrate just how much the capital formation process is changing. Increasingly, companies are listing on public markets at a much later stage of their development, after years of growth financed through private capital. This shift has implications that extend far beyond portfolio allocation to how capital markets function, how risk is distributed across the financial system, and how investors participate in economic opportunity. Professional standards, governance frameworks, and analytical tools will need to evolve alongside these structural market shifts.”
According to the report, the rise of private markets is influencing how capital is allocated, how investment opportunities are accessed, and how market participants evaluate and manage risk. The research underscores the need for updated frameworks and analytical approaches as the distinction between public and private capital markets continues to blur.
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Cheryll-Ann Wilson, PhD, CFA, Senior Affiliate Researcher at CFA Institute and co-author of the report, added: “The growth of private markets is not being driven by a single group. It is being driven by the mutually reinforcing incentives and actions of issuers, asset owners, intermediaries, and policymakers. As private markets scale, they alter mechanisms of price discovery, reshape benchmark composition, redistribute information across market participants, and influence how financial stress propagates through the system. The trajectory of private markets over the next decade will demand a recalibration of policies and practices.”
The report positions private markets as a defining force in the future of the investment landscape, highlighting how their continued expansion could reshape market dynamics, governance expectations, and investment decision-making across the financial ecosystem.
This publication serves as the foundation for a broader CFA Institute Research and Policy Center initiative dedicated to examining the long-term implications of private market growth. Upcoming reports in the series will explore key topics such as retail investor access to private market opportunities, ethical and conflict-of-interest considerations, developments in private credit structures, and policy measures designed to strengthen market integrity and investor protection.
Future research will also present new insights into the potential risk-return benefits of incorporating private market assets into defined contribution retirement portfolios, offering investment professionals and policymakers valuable perspectives on the evolving role of private assets in long-term portfolio construction.
