Navigating Alternative Investments

Alternative investments, also known as private market investments, are assets that are not included in conventional public markets (e.g., stocks and bonds). Alternative investments fall into four key asset classes—private equity, private credit, hedge funds, and real assets (private real estate and infrastructure)—which may have their own unique role in an investor’s portfolio.

In the past decade, individual investors allocated $4 trillion to private markets—and that figure is projected to rise to $12 trillion over the next 10 years¹.

What factors are driving today’s interest in the alternative investment market?

• More companies are staying private longer: The number of US public companies has declined roughly 50% since 1996², and fewer than 15% of companies with revenues over $100 million are public³. Meanwhile, the median age of companies at IPO increased from 6.9 years in 2014 to 11 years in 2025⁴, and the number of US private equity-backed companies increased more than five-fold since 2004⁵. For investors, private markets could be another way to invest in certain companies and their respective growth phase, as well as strategic areas of the economy.
   
• Companies are accessing private capital: Companies and asset owners are facing headwinds due to higher inflation, elevated borrowing costs, a decrease in traditional bank lending opportunities, and macroeconomic uncertainty. These factors have increased demand for private capital, creating opportunities for investors to access private credit, real estate credit, and infrastructure investments. 
   
• Investors are looking to hedge market uncertainty: Macroeconomic, geopolitical, and policy uncertainty have resulted in greater volatility in public markets, causing investors to search for assets with a lower correlation to public markets. 
   
• Structural shifts in the markets are leading to more entry points: Changes in public and private markets—such as the rise of open-end (evergreen) funds—are creating additional entry points to various alternative asset classes and investment strategies.  

What are some of the key considerations for private market investments?

Overall, alternatives are generally considered higher-risk investments, so there are several unique risks and considerations for investors to keep in mind:

• Suitability: Assessing the value of alternative investments and associated risks can be more complex than publicly traded assets. To determine whether an alternative investment is suitable, private market investors are typically required to have additional qualifications (such as Accredited Investor, Qualified Client, or Qualified Purchaser status, varying depending on the specific investment).
   
• Liquidity: This is an often-cited risk of private markets. For certain alternatives, investors are subject to holding periods of seven to 10 years before capital can be withdrawn. However, increased secondary market activity over the past decade has provided investors with alternative liquidity solutions. In the secondary market, investors can access liquidity opportunities by selling private market assets to other investors, typically for a modest discount on the net asset value. Additionally, private market investments may come with capital call requirements. Interested investors should ensure their overall balance sheet and wealth plan account for sufficient liquidity to satisfy capital calls.
   
• Performance: To address this risk, manager selection is key. The success of alternative investments often heavily depends on the skill and capabilities of the investment manager. For example, top-quartile and bottom-quartile private equity funds demonstrate performance spreads of approximately 12.9 percentage points⁸. This also underscores the importance of working with an experienced financial advisor to conduct comprehensive diligence on external managers—incorporating qualitative and quantitative considerations, and ongoing risk management processes.
   
• Default: Alternatives in the credit market can carry higher risk of default than traditional fixed income. Working with a financial advisor to evaluate an opportunity’s financial, operational, legal, and market considerations can help mitigate this risk. 

Investors should fully understand and evaluate these risks alongside their investment objectives, risk tolerance, and liquidity needs when determining the appropriate amount of their portfolio to allocate toward private markets.

Goldman Sachs Private Wealth Management is one of the world’s largest private markets investors and was named World's Best Private Bank for Access to Private Equity by Global Finance for their World’s Best Private Bank Awards 2026⁹. Our dedicated Alternative Capital Markets team works to vet opportunities and curate access to alternatives across a range of sub-asset classes, drawing on long-term relationships with strong fund managers.

To learn more about alternative investments, visit Goldman Sachs Wealth Management’s alternatives page, speak with your Goldman Sachs private wealth advisor, or request an introduction.