One of the first investing and personal finance podcasts, Money Tree Investing Podcast has been a source of information about investing and personal finance since 2014. BIP Capital General Partner and COO Mark Flickinger joined Money Tree Investing host Kirk Chisholm for a conversation about the role of the private markets in a well-diversified portfolio. The following article covers some of the points discussed during the episode. Listen to the full conversation here.
The way investors build and preserve wealth is changing. For high-net-worth individuals (HNWIs) and the advisors who serve them, private markets are no longer a niche reserved for institutions. They are becoming a cornerstone of portfolio construction. The traditional 60/40 allocation of stocks and bonds has lost its effectiveness. To achieve durable growth, families and individuals must look to where much of the value creation is happening – among private companies.
For decades, the 60/40 model was considered the gold standard of diversification. It balanced risk and return in a predictable way, generating steady outcomes for investors. But in today’s environment of persistent inflation, higher interest rates, and muted bond returns, the 60/40 framework often fails to deliver real growth. By introducing private market assets into a portfolio, investors can improve both performance and resilience. Research shows that alternatives can add 300 to 500 basis points of annual return compared to a traditional 60/40 mix. That difference compounds significantly over time. In practice, it can mean the distinction between a portfolio that just keeps pace with inflation and one that generates meaningful long-term wealth.
Modern Portfolio Theory describes this as “bending the efficient frontier.” By diversifying beyond public equities and bonds into private assets, investors can maximize returns for the same level of risk, or work to lower their portfolio volatility while maintaining target returns. [Join an upcoming educational webinar to learn more.]
A generation ago, small-cap stocks gave investors access to the growth phase of America’s most innovative companies. That engine of wealth creation has largely shifted behind private market walls. Consider this: among U.S. companies with more than $100 million in revenue, approximately one in ten is public. Fifteen years ago, investors could buy into a company at IPO when it reached a $500 million valuation. Today, most companies wait until they are closer to $5 billion before going public. That maturity and high cost prevents most of the investing public from accessing these companies.
The implication is clear: the value creation that once fueled small-cap performance now occurs while companies are still private. Investors who restrict themselves to public equities miss out on the most dynamic stages of growth.
"All that value creation from $500 million to $5 billion has now happened in the private markets. That’s where investors used to find growth in small-cap stocks, and that’s why everyone is looking to private markets today." (Mark Flickinger on the Money Tree Investing Podcast)
From the perspective of entrepreneurs, the incentives to remain private are clear. Regulation and compliance costs are heavy. Access to capital in private markets is abundant. And operating outside of public market scrutiny allows founders to build with greater flexibility and control.
Of course, public market investments continue to play a role in providing liquidity. In some cases, the IPO still represents a valuable exit. But the old playbook of "grow to $100 million in revenue and then go public" no longer applies or means what it once did. Companies now scale well into the billions in revenue with private investors fueling that growth.
Private markets are not a single asset class but a set of complementary strategies, each with distinct characteristics:
What unites these strategies is their ability to capture innovation and growth before it reaches the public markets. For HNWIs and RIAs, building thoughtful exposure to these areas can meaningfully reshape portfolio performance.
One of the most significant developments in private investing has been the rise of evergreen fund structures. Unlike closed-end funds with rigid capital commitments and long lock-ups, evergreen funds remain open. Investors can contribute capital on an ongoing basis and, importantly, access periodic liquidity. These structures also allow for a singular way to integrate both private credit and private equity into a portfolio. Additionally, these investment structures are accessible to Accredited Investors at lower minimums.
The evergreen structure allows investors to build positions steadily, adjust allocations as their needs change, and avoid the “J-curve” effect that often weighs on traditional private funds. BIP Capital has built two complementary evergreen strategies:
For advisors and investors, these structures represent a bridge between the institutional-quality private market opportunities of the past and the flexible access required today. While risks exist, particularly in overheated markets, disciplined underwriting and manager experience are essential to preserving capital and pursuing consistent, durable returns.
The investment landscape has changed. The question is whether your portfolio strategy has evolved with it.
Public equities will always play a role in providing liquidity, transparency, and broad market exposure. But for investors seeking growth, the center of gravity has shifted. Private markets are where innovation is built, scaled, and monetized. For HNWIs and RIAs, the message is clear: portfolios that do not integrate private equity, private credit, and evergreen structures risk missing the very growth that drives long-term wealth creation.
To explore this topic further, listen to the conversation on the Money Tree Investing Podcast focused on how private markets are reshaping the future of wealth creation and what it means for individual investors and advisors. 🎧 Listen to the episode and read more.
