Allocating private markets in a multi-asset portfolio

As the search for yield intensifies amid volatile public markets and a downward trend in interest rates, private assets offer a tantalising promise of diversification and enhanced returns. The appeal lies in their potential for higher returns through illiquidity premiums and unique opportunities not available in public markets. For institutions, private assets can constitute a significant portion of their portfolios, ranging from 10% to 30%. However, a more conservative approach is advisable for individual investors with less capacity to absorb illiquidity. At Sad Rabbit Investments, we currently hold a 9.6% allocation to private assets within our flagship multi-asset portfolio. This sub-10% allocation reflects our forward-looking strategy, which dynamically adjusts based on market conditions and sentiment. We currently have a ‘neutral’ rating assigned to private assets; however, this could shift to ‘favourable’ towards the end of the year, warranting an increased allocation in 2025.