Public and private markets set for convergence: JPMAM

The traditional divide between public and private markets could become increasingly irrelevant over the coming years, as institutional investors seek greater flexibility to capture opportunities across both asset classes.

J.P. Morgan Asset Management (JPMAM) global head of private markets and customised solutions Jed Laskowitz told Financial Standard he believes the continued expansion of private markets will reshape how institutional investors construct portfolios and allocate capital.

"I do think we'll look back five years from now and say, 'Remember when we only invested in something that was private and only invested in something that was public?'" Laskowitz said.

He believes the shift will be driven by companies remaining private for longer, alongside the growing depth of private capital markets, which increasingly provide businesses with alternatives to public equity and debt issuance.

"Private markets have gotten so large and deep. Companies, whether it's equity or debt, have a choice to make in terms of their funding sources, and they don't have to now go public to get access to that capital."

He said as investors increasingly seek to build the best portfolios, whether they are publicly listed or staying private will become irrelevant.

"Why should I care if they're public or private? That allows us as the investor to make those relative value decisions. There could be different periods of time where there are opportunities in public markets that are offering better opportunities, whether it's valuation or a certain sector of the market that we're interested in might be better suited through a public markets allocation versus a private markets allocation," he said.

"I think the direct lending market did get a little expensive at one point, and maybe there are periods of time where investors are maybe less confident about the level of risk they're taking for the return they're generating in private markets, and you should be able to go to public high yield at that point.

"I think both institutional investors and other types of investors will be looking to managers that have the skills across both of those areas to be able to allocate in the same vehicle."

Laskowitz said the implications are significant for institutional portfolio construction, particularly as Australian super funds continue to increase their exposure to unlisted assets.

Laskowitz suggested an allocation of between 20% and 30% to alternative investments could provide "a good starting point" for institutional portfolios, although the appropriate exposure would depend on individual circumstances.

He argued combining higher-return strategies such as private equity and opportunistic real estate with lower-correlation assets, including core infrastructure and real estate, could improve portfolio diversification and risk-adjusted returns.

However, he cautioned investors must remain conscious of overlapping exposures, particularly to artificial intelligence (AI).

Laskowitz said when speaking with institutional investors, many are increasingly examining AI-related risks across their entire portfolios, including public equities, private equity, infrastructure and debt.

"I think many have more than they thought because they might own a high concentration in their public market portfolio," he said.

"Increasingly some of the large hyperscalers are tapping the debt markets. They might own direct private equity funds, infrastructure funds that are tied to some of the energy demand stories. So, the correlation is fairly high when you think about where it cuts across portfolios."

Laskowitz said investors should consider assets that offer genuinely differentiated exposures.

He added private infrastructure continues to be one of the most compelling long-term opportunities, especially as the global energy demand continues to grow.

"The infrastructure opportunity is massive, and it has a very long tail to it," he said.

Financial Standard was a guest at J.P. Morgan Asset Management's 2026 Asia Summit.