Allocation gap
The allocation gap
Institutions and family offices hold a material share of their portfolios in private markets. Individual investors hold far less, largely because of access.
~50%
of global assets under management is held by individual investors
~16%
of the assets held by alternative investment funds comes from individual investors
21%
of family office portfolios held in private markets in 2024
Bain & Company, Global Private Equity Report 2023 (individual investors). UBS, Global Family Office Report 2025, 21 May 2025 (family offices).
Return and risk
Return and volatility over time
Between 1Q 1998 and 1Q 2025, replacing 20% of a traditional equity and bond portfolio with alternatives moved each of three portfolios to a higher return for similar or lower volatility.
Outcomes vary widely between managers, and the gap between top and bottom-quartile funds is far wider than in listed markets. Manager selection is the largest single determinant of a private markets result.
Annualised volatility and return, 1Q 1998 to 1Q 2025
EquitiesBondsAlternatives
Positions as published by J.P. Morgan Asset Management. Source: Bloomberg, Burgiss, FactSet, NCREIF, PivotalPath, Standard & Poor’s, J.P. Morgan Asset Management.
Sources of return
How private markets create value
Private markets returns come from how assets are owned and governed, not only from what is bought.
01
Active ownership
Private equity owners execute detailed business plans at company and asset level, supported by management teams and industry advisers they appoint.
02
Alignment and governance
Management teams are typically incentivised through equity and incentive plans, and boards are smaller, more expert and meet more often, free of short-term market reporting.
03
Information advantage
A private sale process allows months of due diligence, including management meetings, customer calls and commercial, legal and tax review, before capital is committed.
04
Complexity premium
Returns are earned through capital structure, operational improvement, tax and legal structuring and exit timing, which reward skill and are harder to replicate.
These sources of return come with trade-offs. Private markets investments are illiquid, valuations are reported less frequently, fees are higher and capital calls must be managed, which is why manager selection, portfolio construction and liquidity management matter.
Role
Spire’s role
Spire exists to close the gap for Australian private investors, turning the sources of private markets return into portfolios they can hold.
Access
Relationships with leading general partners open funds, co-investments and secondaries that private investors rarely reach alone.
Selection
Research and a single Investment Committee concentrate capital with managers Spire expects to sit at the top of their peer group.
Terms
Capital aggregated across Spire solutions supports negotiated fees and entry terms.
Implementation
Each investment is structured for Australian tax, currency, administration and reporting, with liquidity managed at portfolio level.