For many professionals in the Bay Area who have built meaningful wealth through equity compensation, RSUs, or a liquidity event, the question of what to do next with that capital often leads to a familiar crossroads. Public markets offer one path, and private markets offer another, and increasingly, wealth managers and financial media are positioning private markets as an essential component of every sophisticated investor’s portfolio, a characterization that may deserve some scrutiny before capital is committed.

Private markets broadly refer to investments in assets that are not publicly traded, encompassing private equity, private credit, venture capital, real estate partnerships, and infrastructure funds, among others. Access to these strategies has historically been reserved for institutional investors and ultra-high-net-worth individuals, though that landscape has gradually shifted as platforms and fund structures have evolved to accommodate a broader audience of accredited and qualified purchasers.

Why Are High-Net-Worth Investors Paying Attention?

The appeal is understandable, as these strategies may offer exposure to companies and assets unavailable through public exchanges, as well as return profiles that behave differently than traditional stocks and bonds. For someone whose net worth is already heavily concentrated in a single tech company or sector, that diversification argument may feel compelling. It is also worth noting that some research suggests a growing share of economic value creation now happens inside private companies, meaning public markets alone may not capture the full picture of opportunity across certain sectors.

What Does Illiquidity Mean in Practice?

What may often get overlooked in the enthusiasm surrounding private markets is the meaningful set of tradeoffs that accompany them, and the most consequential may be illiquidity. When you commit capital to a private equity or venture fund, you are generally locking that money up for seven to ten years, sometimes longer, with no straightforward ability to exit if your circumstances change, if liquidity needs arise, or if market conditions shift in ways you did not anticipate. For professionals simultaneously managing concentrated stock positions, unvested equity, and ongoing cash flow requirements, layering illiquid vehicles on top of an already complex balance sheet is a decision that warrants serious thought. Secondary markets for private fund interests do exist, but they can be limited, may involve meaningful discounts, and may not always be relied upon as a liquidity solution.

How Do Fees and Transparency Compare to Public Markets?

Private market funds can carry fee structures that are meaningfully higher than what you would encounter in a well-constructed, low-cost public market portfolio, and whether those fees are justified by net-of-fee outcomes is something that cannot be known in advance. Transparency is a related concern that rarely receives enough attention, as valuations of private holdings are typically assessed periodically by the fund manager rather than marked to market, which may create a misleading sense of stability during periods of broader market stress. Understanding what you own, how it is being valued, and how performance is being reported requires a level of ongoing diligence that goes well beyond reviewing a standard brokerage statement.

How Should You Think About Manager Selection?

Unlike public markets, where index-based strategies have historically shown a consistent pattern of results net of fees, private markets are characterized by a wide dispersion of outcomes between top-performing and bottom-performing managers. Selecting the right fund matters considerably, and access to top-tier managers is not evenly distributed. Conducting meaningful due diligence on a private fund, its strategy, its track record, its team, and its fee structure requires both expertise and time, which is another reason why this asset class warrants a deliberate and informed approach rather than a reactive one.

Does This Fit Your Specific Financial Picture?

The more useful question is not whether private markets are inherently good or bad, but whether they are appropriate given your specific financial circumstances. That means honestly examining your liquidity needs over the next decade, your existing concentration risk, your tax situation, your overall asset allocation, and your comfort with longer holding periods and less frequent reporting. For certain investors, a measured allocation to private markets may serve a genuine role within a well-constructed portfolio, while for others, the complexity, illiquidity, and fee structures may not represent a worthwhile tradeoff relative to a disciplined public market strategy.

At Traveka Wealth, we work with tech professionals throughout Los Altos and the broader Bay Area to navigate these planning decisions with a transparent, research-driven approach that emphasizes tax efficiency and pragmatic decision-making. Reach out to our team to discuss strategies tailored to your specific financial situation.

Tony Blagrove, CFA, CFP
Founder, CEO
Direct: (650) 397.2395
Tony.Blagrove@TravekaWealth.com

This material is for informational purposes only and does not constitute an offer to sell or the solicitation of an offer to purchase any security or investment product or services. The content of this material is provided solely for your personal use and shall not be deemed to provide access to any particular transaction or investment opportunity. Traveka Wealth, LLC (“Traveka”) does not intend the information in this material to be investment advice, and the information presented in this material should not be relied upon to make an investment decision. Any third-party information contained herein was prepared by sources deemed to be reliable but is not guaranteed.  All opinions expressed by the participants are solely opinions and should not be relied upon as potential or actual results.

Certain of the information contained herein has been obtained from third- party sources and has not been independently verified. It is made available on an “as is” basis without warranty. Any strategies or investment programs described in this presentation are provided for educational purposes only and are not necessarily indicative of securities offered for sale or private placement offerings available to any investor. 

The views expressed in the referenced materials are subject to change based on market and other conditions. This document contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance; actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur. Historical performance results for investment indices and/or product benchmarks have been provided for general comparison purposes only, and do not include the charges that might be incurred in an actual portfolio, such as transaction and/or custodial charges, investment management fees, or the impact of taxes, the incurrence of which would have the effect of decreasing historical performance results. If performance fees are stated, the performance returns are net of fees which include expense ratios and other fees of the underlying investments but does not include Traveka’s advisory fees. Traveka’s advisory fee will reduce the returns shown in this document.