Private markets offer the potential for flexibility that is needed in this more uncertain world. This includes a broader range of investment techniques, the scope for structural resilience that comes with explicit collateralization and smart structuring, a more appropriate pricing of liquidity, and the greater structural ability to stay in the trade during periods of unsettling volatility.

The increase in demand for private markets will need to be met by a broader and better choices set offered by the industry. Investment-management firms will need to bring to the table a greater degree of cognitive diversity, more of a multidisciplinary mindset, a more global footing (including in more developing countries), and good local presence and solid execution capabilities. Legal jurisdictions will matter much more, as will the compliance infrastructure to navigate a world of ballooning primary and secondary sanctions.

In the world in which massive liquidity injections shielded investors from virtually any and all headwinds, public markets offered significant potential, especially when levered. Meanwhile, the breakdown in the traditional correlation matrix for stocks and bonds, together with the repression of volatility, only enhanced the upside.

Russia’s invasion of Ukraine is speeding up the move away from this world, a process that had already begun. Increasingly, investors will need to consider larger allocations to private markets, both to maximize returns and contain risks. And the industry will have to adapt in both offerings and management.

Mohamed A. El-Erian is a Bloomberg Opinion columnist. He is president of Queens’ College, Cambridge; chief economic adviser at Allianz SE, the parent company of Pimco where he served as CEO and co-CIO; and chair of Gramercy Fund Management. His books include The Only Game in Town and When Markets Collide.

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