Private markets are expanding, but advisers need to manage the consequences

Private markets are often framed as a simple expansion of investor choice. Kev Toohey’s view is that the shift is more significant than that.

For advisers, the rise of private assets is changing the shape of investable markets, altering who holds those assets and increasing the burden of oversight. His message is not that investors should resist the trend, but that they should understand what it means for portfolio construction and client management.

Listed markets are narrowing

Toohey’s first point is that listed markets have shrunk and become less representative. The number of listed companies has fallen. Corporate issuance has narrowed. Large parts of the economy are harder to access through public markets alone.

In Australia, infrastructure shows this trend. Few new companies are listing. Many established assets have been taken private. Even when businesses do list, they often arrive later in their development.

Listed markets no longer provide the breadth of exposure they once did. Investors relying only on public assets may be seeing a much narrower slice of the economy than they realise. This explains why private assets have shifted from an institutional niche to a regular part of wealth portfolios. The appeal is not just return, but access.

Democratisation changes the investor base

Toohey’s second point is that private markets in wealth management are not just about access. They are also about new types of capital entering the asset class.

Historically, institutions such as insurers and pension funds dominated private assets. Their capital was sticky and their horizons long. Retail and advised investors are different. They want liquidity. They can redeem.

That changes the management task. Advisers cannot assume private assets will behave the same way in wealth portfolios as they did in pension funds. Structures matter more. Education matters more. Liquidity expectations matter more. As private markets become more democratic, governance grows in importance.

For advisers, the challenge goes beyond access. The key question is not only whether a client can invest. It is whether the structure suits the investor and whether the monitoring framework is strong enough once the allocation is made.

Tactical positioning still matters

Toohey also highlighted several shorter-term factors shaping his portfolio. Inflation remains front of mind. This has supported a preference for real assets, shorter duration, and selective credit exposure.

Energy is one area of interest. The focus began with supply and demand fundamentals, not geopolitics. Recent disruptions have sharpened that focus. For Australia, vulnerabilities around imports and shipping routes make the issue more pressing.

On credit, Toohey stresses what happens after the initial allocation. Private credit cannot be assessed at entry and then ignored. The real challenge is ongoing access to information and proper monitoring of exposures. Information asymmetry may create opportunity, but it also demands discipline.

He also touched on demographics, though in a more forward-looking way. Ageing populations still matter, but Toohey suggested that AI may begin to alter the usual assumptions around labour supply and dependency ratios. If technology drives genuine productivity gains and more autonomous capability, then the economic effects of demographic ageing may not look quite the same as they once did.

Toohey’s broader message is measured but important. Private markets are expanding because listed markets are narrowing. That creates opportunity, but it also creates a more complicated investment environment. Access has improved, but the responsibilities attached to that access have grown as well. In that setting, the job is not to be alarmist or complacent. It is to recognise that the toolkit is changing, and that portfolio governance has to change with it.