The private markets push is exposing a risk visibility problem

Originally featured in Ignites

Asset managers are increasingly mixing public and private holdings within portfolios, but these blended strategies have revealed a flaw impacting workflows: low risk visibility. With many structures built around the transparency of public markets, the introduction of private market assets has brought disparate data that complicates comparability.

“As firms try to compare exposures across public and private markets, they’re realizing that confidence in portfolio decisions depends on having a more normalized and comparable view of risk,” said Rachel Puleo, Chief Product Officer, Asset Management, Broadridge.

In a 2025 report, Cerulli Associates estimated that U.S. financial advisors had allocated $1.9 trillion to private market strategies with limited liquidity. Cerulli projected this allocation to reach $3.7 trillion through 2029. This rapid industry shift has prompted asset managers to rethink how exposure information is standardized and consider what clear cross-market comparability looks like.

“As firms compare exposures across public and private holdings, they’re realizing that consistency matters just as much as completeness in building the confidence that the decisions that [they’re] making are accurate,” Puleo said.

Reconciling different data

For asset managers, promoting risk visibility requires a clear picture of a portfolio’s holdings with consistent data. However, public and private data differ in format, timing and definition, with private market assets often being more bespoke and less standardized.

Inconsistent data can create blind spots and make one-to-one comparisons particularly challenging within blended portfolios. This risk opacity limits firms’ ability to assess concentration, diversification and downside risk. For example, a portfolio manager may hold a corporate bond and a private credit vehicle lending to the same borrower. With disparate data, they may not observe this overlap, which can create a false sense of diversification across portfolios, nor flag the concentration risk.

For Puleo, it’s integral that data is not only comprehensive but standardized. Strong data hygiene allows teams to understand what the data is showing and what it means for their portfolio, enhancing risk visibility.

“How do you make it such that you are evaluating apples-to-apples?’” Puleo said. “The answer should not be ‘Go out and get more data.’”

Reassessing data infrastructure

To achieve clean, standardized cross-market data, asset managers are having to reevaluate, adapt and upgrade their data infrastructure.

Many asset managers are currently using homegrown systems to try to bridge the gap between these different datasets and maintain risk visibility. But there are also various tools on the market that can help teams scrape data, file it in a firm’s system and standardize it for confident decision-making.

Puleo said reassessing legacy data infrastructure and collaborating with partners with deep subject-matter expertise can help firms organize and standardize their data for portfolio optimization and risk visibility. She noted that AI tools are making it easier to extract data from unstructured documents as well.

The first step to improving risk visibility is for firms to understand their workflows, Puleo said. Then, as they begin to standardize various data types, they can begin to integrate access into each of those processes. This integration can also entail customizing data models to help construct and optimize specific portfolios.

“Data alone does not create clarity,” Puleo said. “It’s how you use the data and how you bring together your entire portfolio that will allow you to have more confidence and trust in those concentration analyses or your diversification assumptions. Clarity comes from being able to compare exposures consistently across the portfolio.”

Collaboration is key

The risk visibility gap may originate from inconsistent data and fragmented infrastructure, but the issue radiates throughout a firm, impacting portfolio oversight, risk assessment and decision-making from front to back. As private market expansion continues to grow, addressing the gap is not a matter of “if” but “when.”

“It’s top of mind for everyone, as it quite honestly should have always been and should continue to be,” Puleo said. “It’s going to come back to the data to drive a consistent and comparable view of exposure across markets.”

Many asset managers are still determining how to best tackle this issue, opening the door to new technology and data strategies that streamline risk assessment for complex, blended strategies. As the industry evolves, collaboration and transformation remain key.

“These are great places where we actually need to come together as an industry, not try to tackle some of these problems alone.”