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You may have heard your financial planner, the news or your super fund mention ‘private markets.’ Put simply, you can't buy and sell these investments on the stock exchange. Private markets can earn higher returns but come with longer lockups and more risk, while public markets are easier to cash out of but tend to earn less. In this context, it’s worth understanding how they work and considering your goals when deciding where to invest your money.
Two ways to invest
Public markets are where you buy shares and bonds listed on an exchange like the ASX. Prices change every day, and you can usually sell whenever you like. Private markets are investments that aren't listed, such as stakes in private companies, loans from non-bank lenders (private credit), and assets like airports or office buildings. You usually invest through a fund, and its value is only updated now and then.
Where businesses get their money
Businesses raise money from whichever investors offer the best deal. Listing on the stock exchange opens the door to lots of investors, but it comes with plenty of rules and public scrutiny. Raising money privately is often simpler and more flexible, which is why many companies now stay private. Australia's private credit market alone has grown to about $213 billion, up from $35 billion ten years ago (Clayton Utz). That means a bigger slice of the economy now sits outside the share market.
Liquidity: how quickly you can get your money back
This is the biggest difference. Shares can be sold within days. Private investments are harder to sell because the money is tied up in loans, buildings and businesses. Some funds lock money away for five to 15 years, and others let you withdraw monthly or quarterly, but they can limit or pause withdrawals if too many people ask at once. For example, if a company collapses and several private credit funds freeze withdrawals, quarterly access to withdrawals may not be ideal.
Returns: possibly higher, but never guaranteed
Private investments may pay more because investors are rewarded for tying up their money. One study found US private equity beat the share market by 2.3 to 3.4 per cent a year after fees between 1986 and 2017 (BNP Paribas). But other research finds the evidence is mixed (Netspar), and results vary widely between funds. Past performance is not a reliable guide to the future.
The risks
Higher potential returns come with trade-offs. These funds can be hard to value as prices are fixed by the fund manager rather than a live market. This means problems can remain hidden. Private companies generally provide less information, so transparency can be an issue. When investing in private companies, it is important to remember that your money may remain locked up, which can become a problem if you need quick access to funds.
You may already own some.
If you're in a super fund, you probably already hold private assets. About 16.5 per cent of the super industry's money was in unlisted assets in June 2025, and more than 20 per cent in the large industry funds. ASIC scrutinises private credit funds, so professional guidance matters before you add more.
Questions to ask your planner
1. Could I need this money in the next five to ten years?
2. What happens if lots of investors want to withdraw at once?
3. What are the total fees?
4. How much of this do I already hold through my super?
Public markets are easier to cash out of and usually cheaper, while private markets offer the chance of higher returns in exchange for locked-up money and extra risk. Neither is better on its own. The right mix depends on your goals, your timeframe and how much cash you may need at short notice. If you would like to understand how much private market exposure you already have, and whether more makes sense for you, get in touch to arrange a review.
General Advice Warning: The information provided in this article is general in nature and does not consider your particular investment objectives, financial situation, or insurance needs; we therefore recommend you seek advice tailored to your individual circumstances before making any specific decisions.
Dobbrick Financial G Pty Ltd ABN 57 686 172 109 and Dobbrick Financial Services (Ipswich) ABN 86 100 184 521 and their advisers are authorised representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306.
