Private Markets: The Missing Piece in a Truly Diversified Portfolio
At High Falls Advisors, we remind clients that diversification is more than simply spreading investments across a variety of publicly traded funds. True diversification means incorporating different sources of return, not just more positions in the same universe.
Most investors rely exclusively on public markets—and public equities and bonds remain essential components of a long‑term plan. Yet portfolios built only from public markets may leave out entire sectors of economic growth.
Public Markets are Large—But Narrow
Public markets represent a major share of the global financial system:
- Global equity markets: approximately $101 trillion in market capitalization.
- Global fixed income: about $130 trillion in outstanding debt.
While these markets are enormous, they offer exposure only to companies and issuers that choose to list on public exchanges—a shrinking segment of the overall economy. Much of today’s business formation and early‑stage value creation occurs long before companies ever consider an IPO.
Private Markets are Smaller—But Broader
Despite their growing popularity, private markets remain a smaller slice of the global asset landscape:
- Global private capital AUM: approximately $13 trillion.
- Private markets in early 2025: about $12.9 trillion, driven largely by private equity.
This means private markets represent less than 5% of global financing markets yet provide access to a wide range of economic opportunities not represented in public indices.
Private markets include:
- Private equity
- Private credit
- Private real estate
- Infrastructure
- Real assets
These areas allow investors to broaden diversification beyond the public segments that dominate traditional portfolios.
How Large are Private Companies?
- Based on the 2025 Forbes America’s Top Private Companies list, and supplemented with revenue verification from Statista, Forbes, and independent financial sources.
1. Cargill — $160 billion (2024 revenue)
Cargill remains the largest privately held company in the United States, with $160 billion in revenue. [statista.com]
2. Koch Industries — $125 billion (2024 revenue)
Koch is consistently No. 2, with Forbes reporting annual revenue exceeding $125 billion. [forbes.com]
3. Publix Super Markets — $59.7 billion (2024 revenue)
Publix posted $59.7 billion in fiscal‑year 2024 sales. [finance.yahoo.com]
4. Mars, Inc. — $55 billion (2024 revenue)
Mars reported approximately $55 billion in revenue for 2024. [forbes.com]
5. H‑E‑B — $46.5 billion (2024 revenue)
H‑E‑B recorded $46.5 billion in revenue in 2024. [en.wikipedia.org]
Why Private Markets Enhance Diversification
1. Different Drivers of Return
Private investments generate returns through business improvements, lending structures, negotiated protections, and contractual income—rather than the daily sentiment swings seen in public markets.
2. Lower Correlation to Public Market Volatility
Private market valuations typically adjust based on fundamentals and manager‑reported financials, resulting in smoother performance and reduced sensitivity to short‑term market fluctuations.
3. Access to Under‑Represented Growth Areas
Many companies stay private longer, meaning significant growth occurs before any public listing. Private markets help capture opportunities that public‑only portfolios miss.
4. Reduced Concentration Risk
Today’s public equity indices are increasingly dominated by a handful of mega‑cap companies. Private markets broaden exposure across company sizes, industries, and capital structures.
What This Means for Long‑Term Investors
A portfolio built solely from U.S. and global public markets may appear well diversified, but in practice, it is still concentrated in:
- Public equity risk
- Interest‑rate‑driven fixed income
- A limited and shrinking universe of listed companies
Private markets help fill that gap by providing different engines of return and broadening the opportunity set for long‑term investors.
Access to Private Market Investments Has Improved
At HFA, we believe investors are best served when they have access to a broader set of tools to help them reach their financial goals. For decades, private markets were one of the most valuable—but least accessible—parts of the investment universe. High minimums, complex paperwork, and limited operational support meant these opportunities were largely reserved for institutions and ultra‑high‑net‑worth families.
The landscape is changing quickly. Thanks to major advances in technology and new partnerships across the wealth management industry, access to private equity, private credit, and real assets has improved in meaningful, practical ways. Today, advisors can incorporate private markets into client portfolios more seamlessly and more responsibly than ever before.
Here’s how the access equation has shifted—and what it means for thoughtful portfolio construction.
A New Generation of Model Portfolios that Include Private Markets
One of the most significant developments is the emergence of public‑private model portfolios, giving advisors the ability to blend public and private investments in a single, professionally managed portfolio.
Why This Matters for Clients
For clients seeking broader diversification, improved income opportunities, or exposure to segments of the economy not available in public markets, these developments represent real progress.
Access that was once limited to a small segment of investors is now available—when suitable—across a much broader portion of the wealth market. Tools once reserved for institutions can now be incorporated into a comprehensive financial plan with the same diligence, oversight, and fiduciary care we apply to traditional investments.
At HFA, we view these changes as part of a larger movement toward more holistic, thoughtfully constructed portfolios—where private markets serve as one additional lever to help clients move confidently toward their long‑term goals.
Our goal is to help clients build portfolios that are resilient across market environments. Thoughtfully incorporating private‑market solutions can strengthen diversification and support more stable long‑term outcomes.
High Falls Advisors Compliance Disclosures
This material is intended for informational and educational purposes only and should not be construed as investment advice, a recommendation, or an offer to buy or sell any security. Private market investments involve significant risks, including illiquidity, long time horizons, loss of principal, and reliance on manager skill. They are not suitable for all investors.
All investing involves risk, including loss of principal. Past performance is not indicative of future results. Diversification does not ensure a profit or protect against a loss in declining markets.
Private market data and market size figures are based on third‑party sources believed to be reliable; however, High Falls Advisors cannot guarantee their accuracy or completeness.
Private investments may be available only to qualified clients or accredited investors and may require financial and liquidity considerations that differ from traditional public market investments.
High Falls Advisors, Inc. is a Registered Investment Adviser. Registration does not imply any particular level of skill or training.
Investors should consult their financial adviser, tax adviser, and legal professionals before making any investment decisions.