Amid rising tech concentration, middle market private equity can help diversify portfolios through broader sector exposure.
authors
Christopher Bole
Christopher Bole
Vice President, Financial Writer
Private equity correlation to public markets
Chart comparing private equity strategy correlations to global equities and global fixed income.
Source: Preqin Insights+, Aladdin, MSCI, Bloomberg. Data as of November 2025. Correlation is calculated based on quarterly performance from Q1 2006 to Q2 2025. Buyout fund size categories are as follows: Small, <$500M; large, $1.5B-4.5B.
  • Public markets have become increasingly concentrated, with a small group of AI-related companies driving a disproportionate share of equity market returns and economic growth.
  • The same trend has extended into private markets, where capital is increasingly flowing toward AI-related businesses.
  • As more investors crowd into the same theme, diversification becomes harder to achieve and independent sources of growth become increasingly valuable.
  • Historically, smaller buyout funds have exhibited lower correlation to public equities than large buyout funds. Differences in sector composition have been one of the primary drivers.
  • Technology companies represent approximately 46% of the S&P 500’s market cap, compared to 38% of large buyout transaction value and just 15% of middle market buyout transaction value.1
  • For investors seeking to reduce concentration risk, the middle market offers access to a broader cross-section of U.S. businesses and economic growth drivers.
contributing authors
Christopher Bole
Christopher Bole
Vice President, Financial Writer
footnotes + disclosures
  1. Bloomberg, as of May 31, 2026. Pitchbook, as of December 31, 2025. Buyout data show technology deal value as a % of total deal value over the trailing five years.

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