The white paper “Private Market Indexes – Q1 White Paper” explores the growing importance of creating benchmark indexes for private markets. Traditionally, index investing has focused on public markets through benchmarks such as the S&P 500, MSCI World, and major bond indexes. As private assets become a larger share of global capital markets, investors increasingly need reliable tools to measure performance, compare managers, and allocate capital efficiently.
Private markets generally include:
The paper argues that private market indexes may become one of the next major developments in global asset management.
Large institutional investors such as pension funds, sovereign wealth funds, endowments, and family offices have significantly increased allocations to private assets over recent years. These investors seek:
As allocations rise, investors need objective benchmarks to evaluate whether their private investments are outperforming or underperforming expectations.
Many companies now remain private for longer periods before going public. In earlier decades, firms listed earlier in their growth cycle. Today, a substantial portion of value creation often occurs while companies are still private.
As a result, investors cannot rely only on public equity indexes to capture the full economic opportunity set.
Unlike listed equities or bonds, private markets present several structural difficulties.
Public securities trade continuously and generate transparent market prices. Private assets do not. Valuations are often updated quarterly or semi-annually.
Transaction data, fund cash flows, and portfolio valuations are usually proprietary. Access depends on managers, databases, or voluntary reporting.
Because assets are not traded frequently, pricing may lag actual economic conditions. This can smooth returns artificially.
Every private transaction can be unique in terms of leverage, governance rights, sector, geography, or stage of development. Standardization is difficult.
Some datasets may overrepresent successful funds or managers willing to disclose data.
These indexes aggregate returns or NAV data from multiple private funds.
Advantages:
Limitations:
These track values derived from private transactions, acquisitions, financing rounds, or secondary market trades.
Advantages:
Limitations:
These use listed securities related to private markets, such as:
Advantages:
Limitations:
Model-Based Synthetic Indexes
These combine public comparables, macroeconomic indicators, valuation models, and historical private data.
Advantages:
Limitations:
The paper emphasizes that methodology credibility is essential. A successful private market index must include:
Because private markets are less transparent than public markets, trust in methodology becomes even more important.
The white paper suggests that private market indexes may help transform private investing in the same way public indexes transformed traditional investing decades ago.
Potential future outcomes:
The evolution of private market indexes is not only about measurement. It is about making private assets more investable, scalable, and understandable to a broader investor base.
If successful, indexing could become a bridge between institutional private capital and mainstream portfolio construction.
