PREQIN PRIMER

Diversification with Private Markets

More investors are putting more capital into private markets – and diversification is a key reason why. This Preqin Primer explores:

how LPs are accessing private markets for differentiated return drivers and lower correlations with public markets
the importance of diversifying across asset classes, geographies, strategies, managers, and vintages within private markets portfolios
the proliferation of co-investment, open-ended, and secondaries funds to achieve diversification in a cost-effective and timely manner

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PREQIN PRIMER

December 3, 2025

By Preqin

Investors turn to diversification to reduce portfolio risk and access new opportunities

More investors are putting more capital into private markets – and diversification is a key motivation behind these allocations. According to Preqin’s investor survey in June 2025, it is the top reason LPs allocate to most asset classes.

This Preqin Primer explores how investors are rethinking diversification. In the first section, we analyze data on private markets performance to determine how these markets can enhance portfolio resilience and provide potential opportunities to improve risk-adjusted returns.

Achieving diversification within private markets portfolios can be challenging, especially given the slowdown in exit activity and reduced distributions. As we explore in the second section, LPs are turning to innovative fund structures and strategies to diversify to the level they want in a cost-effective and timely way.

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