By Antwort Research and Portfolio Management

For decades, private markets have carried an aura of exclusivity and superior performance. The promise: higher returns, better diversification, and access to opportunities unavailable in public markets. Endowments and pensions led the way, and now even private investors — from family offices to affluent individuals — are following suit.

But according to PitchBook’s latest Allocator Solutions report, “Are Private Markets Worth It?” (Q4 2025), investors need to separate narrative from numbers.

The study analyzes what would have happened if a traditional 60/40 public portfolio had allocated 20% to private equity buyouts, private debt, venture capital, or private real estate between 2000 and 2024. Using real fund cash flows, capital pacing, leverage adjustments, and desmoothed valuations, the research aims to answer a deceptively simple question: Do private markets actually add value?

The answer: sometimes — but only for those who get the fundamentals right.

Public vs. Private: The Comparison Problem

PitchBook reminds investors that comparing public and private markets is inherently difficult. Public assets trade daily, with transparent, time-weighted returns. Private assets, by contrast, are illiquid, lagged, and subject to appraisal smoothing — their IRRs often look better than they truly are.

To make a fair comparison, the analysts modeled realistic portfolios that commit capital gradually to private funds, reinvest distributions internally, and compare total performance against a fully public benchmark. They also adjusted for leverage and NAV discounts to approximate true economic risk.

This approach provides a real-world allocator’s view, not a marketing slide.

Private Equity Buyouts: Strong Performer — But Leverage-Driven

Buyouts were the strongest performer in the simulations, adding 0.64% per year in annualized excess returns while reducing volatility relative to a public 60/40 benchmark. On paper, that’s an excellent trade-off.

However, once the public benchmark was adjusted for equivalent leverage — since buyout funds typically employ 50% or more debt — much of the excess return evaporated. In fact, 40% of simulation runs showed no advantage over a levered public portfolio.

The message is clear: buyout funds don’t inherently outperform — they magnify performance through leverage and structure. For institutional allocators, that can still make sense; the leverage is controlled, diversified, and often accretive. For private investors, however, layering illiquidity and leverage risk may not always be worth the incremental complexity.

Private Debt: The Quiet Achiever

Private debt delivered steady gains — +0.57% annualized excess return, with volatility roughly equal to public markets. Even after accounting for leverage, the results remained positive.

The asset class, however, is cyclical. Portfolios that entered before the Global Financial Crisis were hurt, but those established afterward profited immensely as banks retrenched and private lenders filled the gap.

The takeaway for investors: private debt shines in dislocated markets. It offers yield premiums and downside protection when credit is scarce — conditions that may resurface as interest rates remain high.

Venture Capital: High Reward, High Risk, High Dispersion

No asset class exposed the importance of GP selection more starkly than venture capital. Across 100 simulations, the average VC allocation underperformed by –1.21% annually, with volatility soaring to 16.1% versus 11.4% for public markets.

But that average hides a brutal truth: venture outcomes are power-law distributed. Only a few funds — often the same elite GPs — deliver the majority of gains. PitchBook found that just 2 out of 100 simulated VC portfolios produced positive excess returns. The rest lagged the Nasdaq 100, which itself has captured much of the innovation-driven upside investors seek from VC.

This highlights an essential principle: GP selection isn’t just important in venture — it is everything. Access to top-quartile managers like Sequoia, Andreessen Horowitz, or Accel can mean the difference between compounding at 20% annually or barely keeping up with the S&P 500.

For allocators without access to those GPs, VC is less a growth engine and more a lottery ticket. For private investors, especially those entering through broad-based VC vehicles or “democratized” retail feeders, the dispersion risk is immense. Unless you can access proven managers, the odds of meaningful outperformance are low.

Real Estate: Lower Volatility, Lower Returns

Private real estate slightly reduced portfolio volatility but didn’t improve returns. The allocation detracted –0.29% per year on average, though desmoothed volatility dropped below that of public REITs.

Performance was heavily cycle-dependent: allocations made before the 2008 crisis were punished, while post-2010 vintages performed respectably. For institutions seeking smoother reported performance and diversification, private real estate still serves a purpose. But for private investors chasing return enhancement, the trade-off — less liquidity and higher fees for marginally lower returns — is hard to justify.

Timing and Vintage Matter

PitchBook’s simulation made one thing clear: when you invest matters as much as what you invest in.

Starting in 2010, after the GFC, would have improved performance dramatically for most strategies:

• Buyouts: +0.53% higher annualized excess return.
• Private Debt: Early start (2000) fared better, capturing the post-crisis credit boom.
• Venture Capital: +0.61% improvement by avoiding dot-com-era vintages.
• Real Estate: +0.77% improvement by sidestepping the pre-crisis bubble.

Vintage exposure defines investor experience — a reminder that commitment pacing and long-term program design are critical. Dumping capital into private funds during euphoric markets often locks in weak vintages for years.

The GP Factor: The Decider of Value

Across all asset classes, one theme dominates: General Partner (GP) selection is the single most important driver of private market performance.

PitchBook’s data implicitly proves it. The difference between top- and bottom-quartile managers in private equity or venture capital can exceed 1,000 basis points annually. Even in private debt and real estate, dispersion is significant.

Why? Because private markets are idiosyncratic and opaque. There are no passive equivalents. Every fund is an active decision — of strategy, sourcing, leverage, and execution. Success depends on a GP’s discipline in deploying capital, managing risk, and exiting investments.

For allocators with the resources to conduct deep due diligence and access top GPs, private markets can indeed be “worth it.” For everyone else, the average outcome may be mediocre once fees, carry, and liquidity costs are considered.

In essence, private markets reward selection skill, not blind allocation.

Private Investors and the Rise of Feeder Platforms

For large endowments and pension funds, the case for private markets remains intact. Their size, patience, and access to premier managers allow them to ride out cycles and capture alpha unavailable elsewhere.

For private investors, however, the equation has historically been harder to solve:

• Limited access to top-quartile GPs.
• High fees and additional fund-of-funds layers.
• Long lockups with little liquidity.

But this landscape is changing fast. A new generation of feeder and access platforms is emerging as the de facto private asset allocator for private investors and family offices. These platforms act as institutional gatekeepers — conducting robust GP due diligence, securing commitments to top-quartile funds, and pooling investors’ capital efficiently to gain entry into high-quality managers that were once off-limits.

The best of these platforms also focus on fee alignment. By minimizing added layers of cost — sometimes reducing total fees by 50–70% compared to traditional fund-of-funds structures — they create a model that better serves investors rather than intermediaries.

In essence, these platforms are becoming the bridge between institutional and private capital. For family offices and sophisticated investors, partnering with a reputable feeder platform can replicate many of the advantages of institutional investing: access, diversification, and scale.

That doesn’t eliminate all risk — timing and manager dispersion still matter — but it finally gives private investors a fighting chance at achieving institutional-grade private market outcomes.

So, Are Private Markets Worth It?

PitchBook’s data leads to a nuanced but firm conclusion:
Private markets can enhance portfolios — but not universally, and never automatically.

• Buyouts and private debt can improve returns and risk-adjusted performance when executed through high-quality managers and sensible pacing.
• Venture capital offers extraordinary upside but only for investors with access to top GPs and tolerance for volatility.
• Real estate adds stability but seldom alpha.
• Timing, GP selection, and access outweigh asset class choice itself.

For institutional and sophisticated private investors who understand these dynamics — or who partner with robust, aligned feeder platforms — private markets remain a valuable tool. For everyone else, the liquid, transparent, and low-cost public markets may still deliver the best long-term results.

In other words, private markets are worth it — but only if you earn your edge.

Source: PitchBook, “Allocator Solutions: Are Private Markets Worth It?” Q4 2025.