Accessing meaningful diversification through the U.S. middle market
PRIVATE EQUITY AND THE ILLUSION OF DIVERSIFICATION
For investors seeking differentiated exposure, the U.S. middle market offers a distinct opportunity set. Compared with the upper end of private equity, middle market companies operate across a broader range of a broader range of industries and represent a sector mix that more closely mirrors the U.S. economy.
Source: U.S. BEA, Bloomberg Finance, L.P., Pitchbook, as of Q1 2025.
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“Private Equity and the Illusion of Diversification”
Finding diversifying sources of growth in the middle market
As companies stay private longer, an increasing share of corporate growth is occurring in the private market. While this expands the opportunity set for private equity, it also makes selectivity increasingly important for investors seeking to diversify their public market exposure.
The middle market may offer diversifying sources of return, with growth drivers that differ from public markets and large cap private equity. Additionally these businesses often have lower entry valuations and greater ability to drive operational value creation. In this conversation, CIO Mike Kelly and Head of Private Equity Solutions Dan Wilk discuss where investors may find diversification in today's concentrated market.
RETHINKING DIVERSIFICATION IN THE AGE OF AI
Our Investment Research team’s recent report, Hidden Layers: Rethinking Diversification in the AI Era, we quantify AI exposure across equities, credit, real estate and infrastructure, helping investors identify concentration risks in portfolios that a traditional asset class framework may mask.
HIDDEN LAYERS: RETHINKING DIVERSIFICATION IN THE AI ERA
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“Private Equity and the Illusion of Diversification”
Explore the Middle Market Opportunity
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