By combining public and private strategies, the firm observes that public markets react more quickly to crises. This provides predictive insights into the slower-moving private markets, creating an informational edge to anticipate cycles and opportunities before they fully materialize.

Historically, private equity was pursued for its potential outperformance (alpha). Today, with shrinking public markets, its main value is providing diversification and access to a growing universe of private companies that are no longer available on public exchanges. This makes it a core portfolio completion tool.

Companies are willing to pay a 150-200 basis point premium for private credit to gain a strategic partner who provides bespoke financing, governance, and expertise for complex needs like carve-outs. This partnership value proposition distinguishes it from transactional public markets.

The term 'private equity' is now insufficient. The M&A market's capital base has expanded to include sovereign wealth funds and large, tech-generated family offices that invest directly or co-invest like traditional PE firms. This diversification creates a larger, more resilient pool of capital for deals.

Corporations are increasingly shifting from asset-heavy to capital-light models, often through complex transactions like sale-leasebacks. This strategic trend creates bespoke financing needs that are better served by the flexible solutions of private credit providers than by rigid public markets.

While default risk exists, the more pressing problem for credit investors is a severe supply-demand imbalance. A shortage of new M&A and corporate issuance, combined with massive sideline capital (e.g., $8T in money markets), keeps spreads historically tight and makes finding attractive opportunities the main challenge.

While fears of retail investors gambling on venture capital exist, the primary growth in retail alternatives is in yield-oriented strategies like private credit and infrastructure. These products meet the demand for high current income and lower volatility, especially for those in or near retirement, making them a more logical first step.

For the sophisticated custom target-date funds that will be early adopters, private credit is the easiest first step. Unlike private equity, some private credit products can already be marked daily. This operational readiness, combined with liquidity from distributions, makes it the path of least resistance.

The venture capital paradigm has inverted. Historically, private companies traded at an "illiquidity discount" to their public counterparts. Now, for elite companies, there is an "access premium" where investors pay more for private shares due to scarcity and hype. This makes staying private longer more attractive.