Private Markets' Data Problem Is Finally Getting Solved

What's New

Luke Flemmer, Head of Private Assets at MSCI, sat down with Alt Goes Mainstream to lay out how data harmonization is quietly becoming the defining infrastructure challenge of private markets. Drawing on a career that spans robotics, fixed income trading floors, and Goldman Sachs Asset Management, Flemmer argues that private markets are undergoing the same standardization-driven transformation that reshaped equities, fixed income, and FX over the past two decades, and that MSCI is positioning itself as the independent connective tissue to make it happen.

Why It Matters

The private markets data gap is no longer an inconvenience for sophisticated institutions. It is now the primary barrier blocking the wealth channel unlock, constraining total portfolio construction, and creating systemic risk through upward sticky marks and denominator effect distortions. As allocations to private assets grow and products reach deeper into retirement infrastructure, the absence of normalized, timely, comparable data becomes a fiduciary liability, not just an analytical inconvenience.

Big Picture Drivers

• Data fragmentation: Unlike public markets, which were built top-down around centralized venues and ticker tape pricing dating to 1867, private markets evolved bilaterally and bottom-up, producing inherently disjoint, non-normalized data sets that resist comparison and scale.

• Denominator effect dysfunction: Post-Covid dislocations exposed how upward sticky private marks, unanchored to real-time public market correlations, can trigger forced LP secondary sales at discounts that would not have occurred under more rigorous pricing discipline.

• Total portfolio imperative: Allocators managing 15 to 30% private equity exposure can no longer treat it as an unanalyzed sidebar. Suitability, factor decomposition, and liquidity stress testing at the total portfolio level now require private data quality to approach public market rigor.

• Secondary market flywheel: At roughly $220B in volume and growing at 40% annually, the secondary market is generating real price discovery that feeds back into index construction and daily pricing models, creating a self-reinforcing loop between transparency and liquidity.

• Wealth channel pressure: Retail and retirement investors genuinely want private markets exposure, but advisers cannot meet fiduciary suitability standards without granular liquidity profiling, factor analysis, and benchmarking tools that do not yet fully exist.

By The Numbers

• $220B in secondary market volume in the most recent year, split between GP-led and LP-led transactions

• 40% annual growth rate in secondaries volume

• 85/15 blend used in MSCI's new public-private composite index, combining ACWI with a daily-priced private equity sleeve

• 200+ basis points of durable alpha identified in MSCI's private equity analysis, persistent across market regimes even net of fees

• 150 to 200 bps additional alpha left on the table by the passive PERT replication ETF (ticker: GDP) versus direct closed-end fund strategies

Key Trends to Watch

• Daily private equity pricing is becoming real: MSCI's methodology combines lagged manager marks with public market nowcasting models to produce a daily composite price, a capability that underpins both the 85/15 index and the emerging derivative market potential for private assets.

• Indexation is enabling passive private equity exposure: Goldman Sachs launched an ETF on top of MSCI's Private Equity Return Tracker (PERT), offering factor-tilted replication of private equity performance, a structural shift that could democratize access without requiring closed-end fund commitment.

• Terminology standardization is as important as data standardization: Flemmer argues that different investors can have different liquidity needs, but all market participants must use identical definitions of key terms like liquidity, or product design and suitability frameworks will systematically mislead retail allocators.

• AI is emerging as a third data source: Beyond manager marks and secondary transaction data, AI-driven external modeling of private companies is beginning to provide outside-in pricing signals, reducing dependence on GP-supplied information and creating a more independent valuation layer over time.

The Wrap

The private markets data problem is not a background issue waiting to be solved at some future inflection point. It is the gating factor on everything that matters right now: wealth channel scale, 401k access, total portfolio construction, and a credible secondary and derivatives market. MSCI's bet is that an independent, non-product-selling entity sitting at the intersection of managers, allocators, and market infrastructure is uniquely positioned to drive the harmonization layer that every participant needs but no single participant can build alone. The firms and allocators that engage seriously with that infrastructure now will have a structural edge when the market reaches the scale that everyone is racing toward.