Applying Public Market Principles to the Private Markets

By: Austin Guest | Published: 02/07/2023
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2 minutes

As a former independent advisor, I’ve counseled clients on achieving a balanced public market portfolio for the better part of a decade. Regardless of the marketplace, these strategies remain critical to a robust portfolio that performs over time

Many of the same public market principles can be applied to the private markets using Gridline:


Trying to beat the market tends not to work. After all, I’d never just buy Apple and Microsoft when I could own the entire Nasdaq. 

Most people who say “I’m in alts” are merely participating in a couple of funds but don’t have a private market portfolio built on proven principles.

Rather than trying to hit a home run with one or two feeder funds, I can spread capital amongst multiple managers, multiple underlying industries, more geographies, etc., through a Gridline thematic portfolio.

Even if all I do is track the market concerning PE, that still boosts the blended average of my entire portfolio tremendously. 

Portfolio construction. 

The core-satellite approach has been utilized in the public space for decades. You have your beta generators (40-50% of your portfolio) which track the asset class, and your potential alpha generators, which can deliver superior returns. 

Generally, you’re at least tracking the market, but the academic research supports our addition of emerging private market fund managers and their ability to generate significant alpha.

Dollar-cost averaging. 

Investors can make regularly timed purchases in the asset class to smooth out volatility rather than throwing in a lump sum. 

For example, if I want PE exposure, I can hit our Buyout Portfolio in the 2022 vintage, 2023, and 2024 to get steady exposure to the asset class throughout changing economic conditions.

Keep expenses low. 

Gridline’s thematic portfolio funds provide retail investors with a low-cost way to gain diversified exposure to the private markets. You can think of them as a fund of funds without the fund of funds economics. 

I genuinely wish something like Gridline had existed when I was still practicing. Gaining access to the private markets in a meaningful way would have added significant value to my client’s outcomes and given me a more robust value prop in my client acquisition efforts.

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