Private markets – experience matters

Mike Taylor

Managing Editor and Publisher

31 March 2026

Private markets – covering unlisted assets such as private equity, private credit, venture capital, and real assets – are experiencing significant growth both in Australia and globally. These investments offer a compelling value proposition: historically enhanced returns, portfolio diversification, access to innovation and key themes like energy transition, reduced volatility, and inflation protection that public markets cannot easily replicate.

Speaking at the IMAP Portfolio Management Conference in Sydney, Alex Donald, CEO of Ironbark Investment Solutions; Chris Ogilvie, CIO at Invest Blue; and Alex Cousley, Senior Portfolio Manager at Russell Investments, explained how they had developed a private market SMA to take advantage of these characteristics.

Ogilvie noted that, despite the complexity of this area of investing, prior to having private market Managed Portfolios available, there had been a tendency among advisers to select private market investments themselves. As a licensee InvestBlue was uncomfortable with this approach.

The Cornerstone Private Markets Managed Portfolio – a diversified private markets SMA that took around 12 months to develop. The SMA carries a 70/30 benchmark with flexibility to move between 60-80% growth, requires a minimum initial investment of $25,000, and is limited to qualified advised clients with at least $500,000 in investible wealth. Private market allocations are capped by InvestBlue at 5-15% of each client’s portfolio depending on their risk profile.

Ogilvie emphasises that this product is deliberately not available to every client. A central reason is the near-certainty of an illiquidity or “lock-up” event at some point during the investment cycle – a period during which investors are restricted from redeeming their capital. Managing client expectations around this was a cornerstone of the SMA’s rollout, with Invest Blue conducting a comprehensive education program for both advisers and clients to ensure they understood the long-term, illiquid nature of private market assets.

When a lock-up event occurs, Invest Blue’s approach is to ensure private market assets are never relied upon to fund liquidity needs or pension payments. Donald notes that advisers can remove affected assets from the managed account structure, allowing clients to hold them separately while the remainder of the portfolio is rebalanced. Some rebalancing functionality within the platform can also be switched off to better manage liquidity during such events.

Cousley identifies fund-specific events – such as significant personnel changes or a large investor withdrawing capital – as the greater concern over broad market volatility. When such events arise, Russell’s research teams assess the severity and may seek to have the fund removed from the SMA.

In terms of portfolio construction, Russell Investments focuses on strategic asset allocation and diversification across private equity, private credit, infrastructure, liquid credit, and multi-strategy credit. Of approximately 9,000 funds globally reviewed, Russell regards around 250 as “investable”, with a preference for global strategies over locally-focused ones, particularly in private equity and credit. Russell’s capital market modelling estimates an illiquidity premium of around 150 basis points per annum for private equity and 80-100 basis points for private credit.

Donald pointed to ASIC’s greater focus  on  the private markets sector due to its perception of greater risks for retail investors. Ogilvie acknowledges these risks but argues that mis-selling – not the asset class itself – is the primary danger. Invest Blue has implemented strong risk controls including minimum entry requirements, maximum exposure limits, adviser vetting, and mandatory rebalancing triggers.

Donald notes that ASIC’s attention is particularly focused on two areas in private credit, valuation processes and governance. Both speakers believe ASIC’s scrutiny should be welcomed as a means of lifting industry standards, and that the regulator’s goal is not to restrict retail access but to ensure it is delivered responsibly and with appropriate governance frameworks in place.