The following is a great (5 min 58 sec) interview with Blue Owl Capital co-founder Marc Lipschultz on the importance of the predictability and the consistency of certain areas of the private markets and how they can act as a stabilizing influence on one's overall portfolio. (Link to Interview: https://www.youtube.com/watch?v=X9kTduC3nwk)
The private markets don't have the price gyrations associated with the public markets where security prices are being voted on every split second of the day. These private market investments have valuations that more closely track their intrinsic value, thus having less principal risk.
As in any investment category, some private market investment types are more secure than others. In this case, a high quality, senior secured, direct lending vehicle is being discussed.
Adding high quality private market solutions as a part of an investment strategy can very meaningfully improve the risk / reward ratio in an investor's portfolio. In our opinion, it is a necessary component for the higher net worth households, because small moves in percentage terms can cause large moves in dollar amounts when we are talking about higher balances, so it is imperative we work to lessen those moves. Adding a stabile non correlated asset can help accomplish that objective.
Reach out to us if you have any questions about private markets.