Private markets for individual investors: a practical guide

Private markets are companies, loans and real assets that do not trade on an exchange, and they are a growing share of the economy. Private capital funds managed USD 16.7 trillion at the end of 2025. For individuals they offer access to that growth, but with long lock-ups, high fees and a wide gap between good and bad managers. Used well, they are a satellite to a public-market core, not a replacement for one.

This guide covers what private markets are, who can invest in them in the UAE, how the economics work, and how to size an allocation.

Why are private markets growing?

Because companies are staying private for longer, and more of the economy’s capital is being raised outside stock exchanges.

• Fewer listed companies. World Bank data shows the number of listed domestic companies in the US fell from 8,090 in 1996 to 3,908 in 2025.
• Later listings. Jay Ritter’s IPO data puts the median age of a company at its US IPO at eight years in 1996 and twelve in 2025, so more of the early growth happens before the public can buy in.
• Most large companies are private. J.P. Morgan’s Guide to Alternatives (3Q 2026) estimates that 86% of US companies with revenue above USD 100 million are privately held.
• The capital has followed. PitchBook’s Q2 2026 fundraising report puts private capital assets under management at USD 16.7 trillion at December 2025, against USD 6.1 trillion in 2016, with private debt at almost USD 2 trillion.

For a long-term investor, the implication is that a portfolio of listed shares alone owns a smaller slice of the economy than it did a generation ago. The 90% You Can’t Buy explores that access gap in more depth.

What are the main types of private market investment?

Each behaves differently. Private credit pays income and sits closer to bonds; venture capital depends on a small number of outsized successes. Treating “alternatives” as one asset class hides more than it reveals.

Who can invest in private markets in the UAE?

Most private funds offered in the UAE’s financial free zones are restricted to Professional Clients. Under the ADGM Financial Services Regulatory Authority’s Conduct of Business Rulebook (COBS 2.4.4), an individual can be classified as a Professional Client if they have net assets of at least USD 1,000,000, excluding their primary residence net of any loan secured on it, and either relevant professional experience in the past twelve months or sufficient knowledge and understanding of the investments. The threshold was raised from USD 500,000 by amendments in August 2023, so older guides are out of date.

In the DIFC, the Dubai Financial Services Authority applies a similar test of USD 1 million in net assets, excluding the primary residence, plus experience or understanding (DFSA COB 2.3.7 and 2.4.2). For comparison, the US accredited-investor standard is a net worth above USD 1 million excluding the primary residence, or income above USD 200,000 a year (USD 300,000 jointly).

The thresholds exist for a reason. Private investments are harder to value, harder to exit and less transparent than listed ones, and regulators want investors to be able to absorb a loss and understand what they hold.

How do fees, capital calls and lock-ups work?

A traditional private equity fund runs to a predictable shape. Vanguard’s primer on private equity describes a fund life of about ten years: capital is called over roughly the first five years as investments are made, and the fund winds down over years eight to ten, with extensions possible in one- or two-year steps.

That shape has four practical consequences:

• You commit, then fund over time. A commitment is a legal obligation to meet capital calls when they come, so the cash must be available on demand for years.
• The J-curve. Fees and early costs come before returns, so a fund’s reported value commonly dips in the early years before investments mature.
• Fees are higher than in public markets. A management fee of around 2% a year on committed capital is common, often stepping down later, plus carried interest that commonly takes 20% of profits above a hurdle of about 8%. Exact terms are set fund by fund.
• Distributions are slow at the moment. McKinsey’s Global Private Markets Report 2026 found that cash returned to private equity investors in the year to June 2025 equalled about 6% of assets, against an average of 16% in 2015 to 2019.

Semi-liquid funds soften the lock-up but do not remove it. US interval funds must offer to repurchase between 5% and 25% of their shares at each repurchase offer (SEC Rule 23c-3). Blackstone’s BREIT, a large non-traded real estate fund, limits redemptions to 2% of net asset value a month and 5% a quarter, and in late 2022 it fulfilled 43% of November requests and 4% of December’s, according to its 2022 annual report. When many investors want out at once, the limits bind.

A secondary market exists for investors who need to sell a fund stake early. Jefferies estimates secondary volume at USD 240 billion in 2025, at an average price of 87% of net asset value, which shows both that exits are possible and that they usually cost something.

Why does manager selection matter so much?

Because the gap between the best and worst managers is many times wider than in public markets. J.P. Morgan’s Guide to Alternatives (3Q 2026) compares top-quartile and bottom-quartile managers:

Private funds: 10-year internal rate of return to 1Q 2026. Public managers: annualised returns 2Q 2016 to 2Q 2026. IRR and time-weighted returns are not strictly comparable. Past performance is not indicative of future results.

In listed equities, picking an average manager rather than a great one costs a few points. In private equity and venture, it is the difference between a strong result and almost nothing. That is the single most important fact about private markets for an individual: access to the asset class is not the same as access to good managers, and an average private fund may not beat a low-cost public portfolio once fees and illiquidity are counted.

Are private markets really less volatile?

They look it, but largely because of how they are measured. Private assets are valued by appraisal, typically quarterly, so reported values move slowly and lag public markets. Research by Getmansky, Lo and Makarov in the Journal of Financial Economics (2004) showed how this smoothing understates true volatility and overstates diversification, and AQR’s Cliff Asness has described the effect as “volatility laundering” (2023).

The diversification that private markets do offer comes from owning different businesses, loans and assets, not from lower risk. A plan that relies on their smooth reported returns to justify a large allocation is relying on an accounting effect.

How much of a portfolio should be in private markets?

There is no universal figure, but a few principles hold:

• Core first. A globally diversified public portfolio and an emergency reserve come before any private allocation. The core is liquid, cheap and does most of the work of reaching long-term goals.
• Size to liquidity, not ambition. Allocate only money you will not need for at least a decade, and leave room for capital calls you cannot fully predict.
• Diversify across managers and years. Committing to several funds over several vintage years reduces the risk that one manager or one market cycle dominates the outcome.
• Know what you own. Read how each fund values its assets, what its redemption terms are, and what the fees are on committed versus invested capital.

Large institutions show what a long-horizon allocation can look like. Our look at ADIA’s portfolio sets out how the Abu Dhabi Investment Authority balances public and private assets, and portfolio building with institutional private equity covers how private equity fits around a public core.

Where Vault fits

Vault runs a globally diversified public-market core for every client and offers curated private-market opportunities as a satellite for clients who qualify, at lower minimums than private banks typically require. See how Vault invests, or talk to us about whether a private allocation suits your plan.

Sources

• PitchBook, Q2 2026 Global Private Market Fundraising Report: private capital AUM USD 16.7 trillion at December 2025.
• McKinsey & Company, Global Private Markets Report 2026, 5 January 2026.
• J.P. Morgan Asset Management, Guide to Alternatives, 3Q 2026: manager dispersion; share of large US companies that are private.
• World Bank, World Development Indicators, listed domestic companies, United States, 1996 and 2025.
• Jay R. Ritter, “Initial Public Offerings: Updated Statistics”, Table 4, December 2025.
• ADGM FSRA, Conduct of Business Rulebook (COBS) 2.4.4; DFSA, Conduct of Business Module (COB) 2.3.7 and 2.4.2; US SEC, Regulation D Rule 501(a).
• Vanguard, private equity primer: fund life, capital calls and the J-curve.
• US SEC, Rule 23c-3 (interval funds); Blackstone Real Estate Income Trust, Form 10-K for fiscal year 2022.
• Jefferies, Global Secondary Market Review, FY 2025.
• M. Getmansky, A. W. Lo and I. Makarov, “An Econometric Model of Serial Correlation and Illiquidity in Hedge Fund Returns”, Journal of Financial Economics, 2004; C. Asness, “Volatility Laundering”, AQR, 6 January 2023.

This article is general information, not a recommendation or an offer of any investment, and it does not describe any specific Vault product or fund. Private market investments are illiquid, carry a risk of loss of capital and may be available only to Professional Clients. Past performance is not indicative of future results. Regulated by the FSRA, and registered in ADGM.