Private markets: A new generation of benchmarks

The process of building benchmarks for private markets is considered a fundamental part in the democratisation of knowledge of investment markets. Ari Rajendra (S&P Dow Jones Indices) and Toby Potter (IMAP) discuss the ways in which private markets can be measured and assessed to create greater transparency in these assets.

Private markets — an umbrella term for a range of unlisted investments, including private equity, private credit, venture capital, and real assets — have grown rapidly over recent years, with  global AUM predicted to reach approximately USD 32 trillion by 2030, according to a report by Preqin*.

It is also a sector that is gaining increasing interest from  affluent retail investors who are looking to access wider and potentially more lucrative opportunities outside of listed investments

As Head of Private Markets Indices at S&P Dow Jones Indices (S&P DJI), Ari Rajendra leads a dedicated team tasked with building indices in private markets, a term he refers to as “the new age of benchmarks”. “We’re only in the early stage of benchmarking and where data is available, we’re progressively working our way through the granularity of private markets,” he says.

*Source: Preqin, “Preqin Private Markets in 2030 report”. $32 trillion figure includes hedge funds.

By Jayson Forrest

Continued.....

Addressing the topic ‘Opening up private markets: Creating more access and transparency’ at the 2026 IMAP Portfolio Management Conference in Sydney, Ari acknowledges that to date, it has been difficult to access reliable data to measure and benchmark private markets. And while private market benchmarks have been in existence for a number of years, these primarily comprise of fund-based benchmarks (where managers report their returns); peer-group comparisons; and vintage-type comparisons.

“The performance measurement of private markets is very different to public markets,” says Ari. “And while these measurements remain useful from a performance reporting and manager selection perspective, there are limitations. For example, the frequency of valuation is lagged and in terms of transparency, we’re not seeing the asset-level characteristics (an investment’s risk, return, liquidity, and tangible nature, which is crucial for portfolio diversification) of the asset class.”

S&P DJI is focused on providing greater transparency at both the fund and asset-level by building innovative indices that go beyond performance - providing insight into the underlying drivers to better understand and measure risk from a total portfolio perspective.

“What we’re trying to do is drill down into funds to gain asset level information. We want to build indices based on that asset-level information, which we believe will make a difference in better understanding and measuring portfolios,” he says.

However, Ari understands how challenging it is to access accurate and reliable data in private markets, which is widely considered to be an opaque asset class. Data that is highly fragmented and comes with limited structure, the timeliness of data (where typically, valuation is on a quarterly basis, but often there is a lag when this gets reported), and

comparability of data all feed into this. Ari adds that given data is fragmented across asset managers — which all have different styles and standards in how they report —  the standardisation of data is currently not available, which makes comparing data difficult.

“It’s a good question,” says Ari. “We’re engaging with various entities and bringing that data in-house, where we apply our standards, methodologies and governance to provide a standardisation of data. Naturally, we need to apply the necessary due diligence when we receive data, and it will take time for structures and data to develop across different regions, like Europe and Australia.”

However, the benefits to managers and investors of having access to standardised data in private markets is compelling, enabling greater measurement and transparency of investments and portfolios.

Ari also believes there are incentives for private credit managers to report their underlying assets, as they progressively move from institutional and ultra-high-net-worth investors, towards  affluent retail investors.

As a result, Ari says the market is seeing more availability of evergreen funds, also known as open-ended private market investment vehicles. These funds have a perpetual lifespan, allowing for continuous capital investment and periodic liquidity (rather than fixed-term liquidity), which   provide investors with greater fund transparency and more attractive features.

“Once you move down the level of investment sophistication, there needs to be greater simplicity in terms of what you are actually investing in. There is acknowledgment by private credit managers that indices can bring transparency, clarity and understanding. Indices are not just a measurement tool, they bring an independent framework for what an investor is investing in, just like we see with public markets and ETFs,” says Ari.

It’s a view supported by Toby Potter — Chair of IMAP — who adds private market benchmarks are also in the interests of asset owners, which in Australia are predominantly industry funds. He believes it is in the interest of these funds to advise investment managers to participate in the sharing of their data, which will provide asset owners with transparent benchmarks that they can then rely on and use to measure managers against. 

Against this backdrop of a changing economic and political regime, and with increasing fragmentation of the global environment, should investors be de-risking their portfolios?

“It’s an interesting question,” says Jeremy. “It’s our fundamental view that the fragmentation we’re witnessing means dispersion, not collapse. So, you can expect to see greater dispersion, whether it’s on a geographical basis or between countries. You’re going to see greater dispersion between and within industries. That dispersion creates a lot of opportunities.”

However, Jeremy cautions that as advisers construct portfolios, they need to be thoughtful about how they are building asset allocations and the ‘dimensionality’ of the returns in portfolios. Dimensionality refers to the number of identifiable sources of risk and return (dimensions) used to diversify or tilt a portfolio, often focusing on drivers like size, value, and profitability. It represents a shift from simple, low-dimensional models (like just holding the market) to multi-dimensional approaches that systematically target higher expected returns.

When considering equities, Jeremy points to the U.S., which has been the one market that has consistently delivered returns to investors. Since 2009, the U.S. equity market has been the dominant place to be invested, where earnings growth has been the driver for the U.S. market.

“Even if you take out tech (like Nvidia and Microsoft) and look at the broad market, relative to the rest of the world, the U.S. market is still the place to be invested, even when having to pay a premium to be there,” says Jeremy. “We believe there is scope for this to continue, but maybe in a different level of dimensionality.”

Wellington favours private markets, which it believes are more appealing in relation to equity markets in the U.S., particularly late stage companies that are moving from private to public markets. “When we’re thinking about constructive allocations and where innovation can still be dominant, even in the face of potentially greater geopolitical instability, private markets is one area we think is still interesting.”

When it comes to building portfolios, Jeremy believes it’s important to look outside the mega-cap tech stocks. He says forecasted earnings over the next year are far more appealing in U.S. and global small caps.

“So, when we’re thinking about building portfolios, we’re looking at a wider subset of equities. It’s about how we can introduce differentiated returns. And when you look at small caps, many of these companies have a high level of insulation. They are domestically focused and generally are not exposed to the same level of external trade/government policy that impacts large caps.”

In addition, Jeremy points to emerging markets in Europe (like the Czech Republic, Greece, Hungary, Poland, and Turkey), which are also becoming increasingly attractive, when looking at their forward earnings. “So, as you build portfolios and think about dispersion, regional exposures could be more interesting to invest in.” 

Ari Rajendra is Head of Private Markets Indices at S&P Dow Jones Indices (S&P DJI).

He spoke on the topic ‘Opening up private markets: Creating more access and transparency’ at the 2026 IMAP Portfolio Management Conference in Sydney.

The session was moderated by Toby Potter — Chair of IMAP.