Investors are increasingly looking to private equity for opportunities beyond traditional public markets. Governments are also encouraging retail investors, savers, pension funds, and even treasuries to invest in private equity and private credit. Last year, for example, the United States directed its Department of Labor to allow private equity and digital assets within pensions.

In the United Kingdom, under the Mansion House Accord, seventeen of the largest workplace pension providers pledged to allocate at least 10% of their default funds to private markets by 2030. Capital is increasingly flowing away from public markets, where volatility and uncertainty are adding pressure to an already strained environment.

Few people have a complete picture of how the relative risks of private and public equity balance one another, offering different opportunities for different needs. Market movements have been driven by speculation surrounding the conflicts in Iran and Ukraine, while many investors remain concerned about a possible AI bubble and when it might burst. Amid a sea of market noise and uninformed predictions, expert voices are needed to discern the bigger picture.

JPMorgan CEO Jamie Dimon, for example, has repeatedly warned about hidden problems in private credit following the collapses of Tricolor and First Brands. In the UK, Lord Jonathan Kestenbaum has argued that sound investment management requires a nuanced assessment of risk appetite that considers more than external events alone.

He worked with public equity during his directorship at Pershing Square Holdings and with multiple asset classes at RIT Capital Partners. Pershing Square Holdings plc is known for taking outsized, well-researched positions in public equities; during Lord Kestenbaum’s time on its board, the firm’s strategy focused exclusively on public stocks rather than multi-asset-class investment. That perspective is especially important amid heightened volatility and rising oil prices, particularly as BlackRock’s Investment Institute has downgraded its rating of U.S. equities and the market prepares for a significant shift.

BlackRock CEO Larry Fink noted in his 2025 annual letter that the traditional 60/40 stock-and-bond allocation is no longer sufficient for diversification in modern markets. This emphasis on portfolio diversity also informs Lord Kestenbaum’s later observation on the Financial Services Regulation Committee that “flourishing economies thrive with multiple pools of capital that have different risk profiles, time horizons, and return profiles – a kind of ecosystem.”

His experience as chief operating officer of J Rothschild Capital Management, the investment manager of RIT Capital Partners, reinforced this ecosystem approach, in which economies need diverse pools of investment capital to support reliable and stable growth. At RIT, Lord Jonathan Kestenbaum and his colleagues pursued a multi-asset-class investment mandate spanning public stocks, private equity, venture capital, credit funds, and real assets.

Governments seeking to use investment capital to grow their economies recognize that no single investment model can succeed on its own, either for individual investors or for governments seeking to stimulate growth. Public equities trade daily, and listed companies publish extensive financial disclosures, yet their valuations remain vulnerable to broader volatility and investor sentiment. Private markets, by contrast, require patience, involve less transparent valuations, and have historically been accessible mainly to institutional investors able to overcome high barriers to entry.

Government leaders are increasingly directing their agencies toward investment strategies that span multiple asset classes, aiming to encourage economic growth in areas that are struggling. Viewing this as part of a broader system, in which pension money, for example, can be directed into private markets, is important to supporting that growth.

The World Economic Forum, the World Bank, and many economists have argued that pension plans can shape private equity and stimulate economic growth. That potential is realized when private equity capital flows into areas of the economy that are genuinely investable and transparent.

When governments encourage savers to embrace private assets, they should ensure that those investments are selected for their growth potential, a goal that requires proper disclosure standards with which governments themselves must also comply. Larry Fink’s letter argued for a 50/30/20 split among stocks, bonds, and private investments.

According to the Financial Stability Board, the private credit market stands at $1.5 trillion to $2 trillion. Retail access is growing, yet the market has never been tested by a severe downturn, a concern Dimon has raised repeatedly.

Public credit markets, by contrast, also offer expanding opportunities for long-term financing. Green bonds, for example, reached record issuance in the second quarter of 2026, according to Moody’s. In Britain, the £6.25 billion green gilt announced in March can fund nuclear power, illustrating another source of reliable public financing.

Diversification across these pools of capital helps economies absorb volatility. When listed markets fluctuate sharply amid fears of an AI bubble or an oil shock, patient private capital is not necessarily forced to sell. And when private credit tightens, public bond markets can continue financing long-term projects, as Britain’s green gilt demonstrates.

Private equity is not necessarily better than public markets. Choosing between the two requires careful consideration of risk profile, investor appetite, time horizon, and asset diversification. Each criterion should be assessed on its own merits.

The warnings of Jamie Dimon and Larry Fink, alongside Kestenbaum’s views in the House of Lords, highlight the particular considerations involved in evaluating these two asset classes, notably risk and liquidity. An economy with several pools of capital, each operating on a different time horizon, is less likely to experience a complete drying up of liquidity and better positioned to offer investors the transparency needed to make informed decisions.

Policymakers can help investors make an informed choice between private and public markets. The task for governments is not to favor one asset class over another, but to ensure that each is accessible and accompanied by clear explanations of its risks.