If you look at how Singapore’s largest institutional investors, like GIC or Temasek, manage their portfolio, you will notice a common strategy. They don’t just rely on the stock market.  

For decades, large institutional investors and ultra wealthy family offices have allocated capital across a broader range of asset classes beyond publicly listed stocks and bonds, including private market investments^1,2.While many retail investors typically focus on the daily ups and downs of stocks and bonds, the world’s largest funds have been following a different playbook built on assets not found on a public exchange.  

As with any investment, it may not be suitable for everyone. Here’s why some investors are growing their wealth with private markets and moving towards alternatives, while others remain hesitant.

Divergent views on private markets

The divide between those who embrace private investing and those who stay away usually comes down to three main factors: personal risk preferences, the mechanics of the investment, and accessibility.

Personal risk and reward preferences

Investment preference is deeply personal. It often comes down to one question: Do you value stability, or do you value growth?

Some people prioritise the total protection of their principal above all else. They prefer stable options like bank fixed deposits or government bonds. Even if the interest rates struggle to keep pace with inflation (1.2%)³, many investors find peace of mind knowing their capital is secure. For them, potential volatility may feel uncomfortable.

Others believe that playing it too safe is a risk in itself, as inflation can erode their purchasing power over time. These investors are willing to accept a higher level of risk, including the potential loss of some principal, in exchange for the opportunity to earn higher yields and grow their wealth. They see private markets as a necessary tool to outpace inflation and achieve long-term financial goals.

Public vs. private markets: Liquidity and accessibility

Liquidity is one of the key differences between public and private markets.

In public markets, assets such as listed equities and ETFs are typically traded on exchanges, allowing investors to buy or sell based on prevailing market prices during trading hours. This structure offers greater flexibility and price transparency, making it easier for investors to adjust their portfolios as market conditions change.

Private market investments, by contrast, are generally less liquid. These investments are often structured with defined investment horizons, during which capital is committed for a period of time. While some private market instruments may offer shorter durations or periodic subscription and redemption features (i.e. semi-liquid funds), investors should expect less flexibility compared to publicly traded assets.

Another distinction lies in how investments are accessed and managed.

In public markets, most investors can access a wide range of instruments such as listed equities, bonds, and exchange traded funds through brokerage accounts, with relatively low minimum investment sizes. These instruments are generally available to the broader investing public and can be bought or sold on an exchange.

Private market investments, by contrast, are typically offered through private placements or structured offerings and are usually available only to eligible investors, such as accredited or institutional investors. Access is determined by regulatory requirements and investment structure, rather than by investor expertise, with investments often carrying higher minimums.

The historical barrier: A matter of access

Historically, many investors didn’t invest in private markets not because of the assets themselves, but because of the high barrier to entry. For decades, the private market tended to be an invite-only club. As the minimum investment sizes were so large (i.e. $1,000,000), it was simply not relevant to the average person’s financial plan.

Unless an investor was able to commit seven-figure sum to a single deal, they were effectively locked out of this asset class. This created a perception that private investing was only for the elite, leading many individual accredited investors to focus on the more accessible public stock exchange.

How has private markets evolved?

The good news: The old rules of massive minimums and decade-long lockups are no longer the only way to play.

Here are the developments:

A lower entry level

• You no longer need a million dollars to access the institutional-grade products.
• On platforms like ADDX, through a process called fractionalisation, institutional-grade assets that used to require high minimums are now accessible starting from SGD $1,000.
• This allows you to diversify your portfolio at a much lower entry point.

The liquidity myth

A common misconception is that all private investments require a multi-year commitment. This fear often causes investors to avoid the asset classes within private markets entirely.

However, the modern private market offers a much broader spectrum of tenures to fit different liquidity needs. Some instruments, such as commercial paper, may have shorter tenures of around 3 to 12 months. Other private market structures, including certain open-ended funds, may allow subscriptions and redemptions on a periodic basis, such as monthly or quarterly, subject to the fund’s terms and conditions.

That said, secondary liquidity in private markets is typically limited and not guaranteed. Redemptions, where permitted, are subject to the fund’s terms and conditions, fund manager discretion, applicable gating or suspension measures, and prevailing market conditions.

Understanding suitability

Ultimately, the difference between public and private markets is not about one being better than the other, but about how each investment structure aligns with an investor’s preferences, constraints, and objectives. Public markets offer liquidity, transparency, and ease of access, making them suitable for investors who value flexibility and frequent price visibility. Private markets, on the other hand, operate with different mechanics, including longer investment horizons and reduced liquidity, which may suit investors who are comfortable committing capital for defined periods.

As private markets have evolved, barriers such as high minimum investments and limited access have gradually lowered, allowing more accredited investors to consider these assets alongside traditional investments. Even so, private market investments remain one category within a broader investment universe, and they may not be appropriate for everyone.

Understanding the structural differences between public and private markets, as well as one’s own financial situation, understanding of risk, and investment time horizon, is an important starting point when evaluating any investment approach.

References:
¹Global Investor Ranking | Top Private Equity Investors | Private Equity International
²GIC Report on the Management of the Government's Portfolio for the Year 2024/25
³Singapore Inflation Rate

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