Hello there!
This week, we’re taking a look at how private markets are starting to move differently from public stocks, and why that matters.
According to the PitchBook Q2 2025 Private Capital Indexes, the rolling five-year correlation between private-market assets and the S&P 500 has been dropping.
This means areas like private equity, venture capital, real assets, and private debt are now less connected to the ups and downs of public markets. It’s an important trend that’s changing how investors think about diversification.
For a long time, investors thought private markets moved just like public stocks, only slower and harder to trade. But that’s changing. Private assets tend to move more steadily because their values are updated less often, and they don’t react to daily market swings.
The UBS 2025 Private Markets Outlook notes that private NAVs are typically updated quarterly, helping smooth out short-term ups and downs. This makes them more stable during market shocks — as shown in the chart below, private equity losses are generally smaller and less volatile than in public markets.
Lower correlation brings better diversification, but it also changes expectations. If public markets drop quickly, private assets may hold steady for a while before adjusting later when valuations catch up. So while this decoupling can help smooth out volatility, it also requires patience and a clear understanding of liquidity needs.
The New Dynamics of Correlation
Private and public markets are still connected, but not as closely as before. PitchBook’s data shows that this link, or correlation, was strongest in 2020 and 2021, and has been falling since.
That’s because private markets move on a different timeline, deals take longer, valuations are updated less often, and investments are harder to trade. All this makes them react more slowly to daily ups and downs in public stocks.
That said, the link isn’t gone.
For example, the State Street Private Equity Index, which tracks private equity, private debt, and venture capital, returned 7.08% in 2024, while the S&P 500 gained 25.02% in the same year. That’s one of the biggest gaps seen in years and shows that private markets often react later — they don’t fall or rise as fast as public markets.
So yes, correlations are falling, but they haven’t disappeared. Investors and fund managers should pay attention not only to correlation levels but also to timing, liquidity, and broader market conditions. Interest rates, deal flow, and exit opportunities all play a role in how private markets behave.
What’s driving the changing correlation?
Several underlying factors are contributing to why private-market asset classes (such as private equity, real assets, and private debt) are showing lower correlation with public markets than they used to:
Valuation and liquidity mechanisms.
Private assets are typically valued less frequently (e.g., quarterly) and are less liquid than public equities, meaning they react differently (and often more slowly) to market shocks.
For example, MSCI research shows that private equity has a “moderate” correlation with public equity.
Macro and structural tailwinds specific to private assets.
Many private-market opportunities are driven by operational transformation, niche sectors, or illiquidity premia.
According to the Schroders Capital “Private Markets Investment Outlook Q4 2025”, attractive opportunities include “domestic exposures … innovation, transformation … downside resilience … reduced correlation to public markets through idiosyncratic drivers”.
Changing deal-, exit- and fundraising dynamics.
The environment for private markets has shifted, with slower exits, fewer IPOs, more continuation vehicles, and increased secondary market activity.
The Goldman Sachs Asset Management 2025 Private Markets Survey found that 82% of LPs were optimistic about private equity, and 30% of GPs expect increased use of alternative structures, such as continuation vehicles.
Macro-regime change.
Higher and more volatile interest rates, inflation, geopolitical risk, and trade policy all alter the backdrop in which both public and private markets operate.
The McKinsey & Company 2025 Global Private Markets Report shows that private markets have faced the “rapid run-up in global interest rates from 2022 to 2023 (more than 500 bps in the U.S.)” which “shook private equity to the core”.
What This Means for Investors
For portfolio builders, these changes create both opportunities and new challenges. Lower correlation means that adding private assets can help reduce portfolio volatility and improve long-term returns.
According to UBS, total global private-market assets under management reached USD 14.6 trillion in 2024, with private equity making up ~65% (USD 9.5 trillion), real assets ~24% (USD 3.5 trillion), and private debt ~11% (USD 1.6 trillion).
Because private markets move differently from public stocks, adding them to a portfolio can help smooth out ups and downs and improve long-term returns.
Valuations get updated less often, money stays locked for longer periods, and it’s harder to get out quickly if needed. Also, S&P Global notes that private markets are projected to grow to more than US$18 trillion by 2027.
Europe’s Private Markets Cross a New Threshold
According to an article published by Bloomberg, BlackRock highlighted yesterday that European private assets are on track to surpass €5 trillion by 2030, driven by rapid growth in infrastructure, private credit, and energy transition strategies. The firm noted that infrastructure fundraising alone hit €55.4 billion in the first half of 2025, outpacing all other asset classes.
As Gonzalo García from BlackRock’s Global Infrastructure Partners put it, this expansion is being driven by the “once-in-a-generation transformation of the energy ecosystem”, along with digital infrastructure, supply chain rewiring, and the modernization of aging assets.
Private credit is also gaining ground, with BlackRock expecting the asset class in Europe to almost double to over €800 billion by the end of the decade. More than 90% of companies in Europe and the UK with annual revenues above $100 million remain privately owned, underscoring the scale of the opportunity.
Private Equity Keeps Buying: Permira Takes JTC Private
In a sign of renewed confidence in European valuations, Permira has agreed to acquire JTC Plc for £2.3 billion, offering a 37% premium to the company’s pre-announcement share price.
JTC — a London-listed fund administration and corporate services provider with clients across private equity, real estate, and venture capital is set to be taken private by a consortium led by Permira and the Canada Pension Plan Investment Board.
The move highlights how UK-listed mid-caps remain attractively priced for buyout firms and continues a broader trend of take-private deals in Europe, as private capital seeks long-term value away from volatile public markets.
Join us at 0100 Europe 2026!
0100 Europe 2026 is coming back to Amsterdam on April 22–23, bringing together more than 800 investors, fund managers, family offices, and industry leaders from over 50 countries.
The theme, “Steering Through the Liquidity Squeeze,” focuses on how private market players are dealing with slower fundraising and tighter cash flow. With 130+ expert speakers, including top names from EIF, B Capital Group, and Global Ventures, the event will explore market trends, new financing options, and more resilient investment strategies.
🌍 Across the Ecosystem | News & Useful Resources for You
Everyone in private markets is talking about how the gap between public and private assets is reshaping global investing. As correlations fall and valuations move on different timelines, investors are rethinking how to balance long-term growth with short-term volatility.
Across Europe, fund managers are paying close attention to this shift. Many are exploring how digital tools, new liquidity solutions, and secondary markets can help bridge the divide between public and private assets.
As 2026 approaches, the big question isn’t whether private assets will decouple further; it’s how investors will adapt to a world where stability and flexibility matter as much as returns.
📄 Article | Tech stocks suffer worst week since April after $800bn AI sell-off
Tech stocks took a major hit this week, losing around $800 billion in market value amid growing concerns about high valuations and a slowdown in the US economy. Big names like Nvidia, Meta, and Oracle saw steep declines, dragging the Nasdaq down 3%—its worst performance since April.
Analysts warn that the huge, debt-fueled spending on AI infrastructure is starting to look like the early 2000s tech bubble, with even retail investors sitting out the dip for once.
👀 Opinion | Private Is Becoming Public… Will They Live Happily Ever After?
Private and public markets are starting to blend in ways we’ve never seen before. Once reserved for large institutions and wealthy investors, private markets are now opening up to a broader audience thanks to new financial products, digital platforms, and relaxed regulations.
BlackRock and KKR are leading this change, creating investment vehicles that let everyday investors access private equity, credit, and infrastructure deals.
Platforms like the London Stock Exchange’s upcoming PISCES system are also helping make private company shares more tradable, while technology and tokenization are lowering entry barriers and improving liquidity options.
👀 Opinion | Private Markets Are The New High-Growth Public Markets
In his post “Private Markets Are the New High-Growth Public Markets,” Andreessen Horowitz partner David George explains how private markets have become the real engines of growth in tech. Once small and specialized, private tech companies now represent trillions in value, about 15% of the Nasdaq’s total market cap, or closer to 40% if you exclude the “Magnificent 7.”
These companies are growing faster and staying private longer, with over 1,300 “unicorns” worldwide and far more high-growth opportunities than in the public markets. Investors like OpenAI, Anthropic, and SpaceX are driving massive new revenue growth, while public companies in similar sectors are expanding at a much slower pace.