The growing secondary market is changing how capital flows between investors, offering liquidity where there was once very little. In 2026, secondary transactions reached a record $226 billion, reflecting a shift in how institutional investors manage their portfolios in a slower initial public offering (IPO) environment.

While direct access to private equity deals remains limited, publicly listed asset managers with strong secondary platforms offer a practical way to gain exposure to this fast-growing segment.

This article discusses how retail investors can benefit from the secondary market for private assets, which rewards the few shareholders who dominate it.

Key Takeaways

  • At $226 billion, secondaries have become a significant part of institutional investing, driven by liquidity needs and a slowdown in IPO exits.
  • Retail investors can gain exposure through publicly listed asset managers and funds that specialize in secondary strategies.
  • While the market offers growth and income potential, factors such as valuation uncertainty, market cycles, and fee sensitivity should be carefully considered.

Understanding the Secondary Market

When institutions invest assets such as pension funds, endowments, and sovereign wealth funds in a private equity or private credit fund, they typically commit their capital for 10 years or more. However, there are times when these investors require liquidity before the term expires or the fund matures. Rather than wait, they can opt to sell their stake to another buyer on the secondary market.

What Drives the Booming Secondary Market?

The global IPO market has slowed significantly over the past few years. This has created a liquidity gap as more and more companies are choosing to delay their exits and remain private. 

To address this, partners can sell their stakes in private funds or individual assets before maturity using secondary markets.

The two forces influencing the market include:

  1. Limited partner-led activity: The value of LP stake sales more than doubled to $120 billion in 2025 from $55 billion in 2022, as mounting liquidity pressures pushed more investors to offload their stakes. 
  2. General partner-led activity: Fund managers restructure or extend assets through continuation vehicles. This helps maintain control over companies on a growth trajectory while satisfying LP's demands for liquidity. As a result, sales rose to $106 billion in 2025 from $48 billion in 2022.

With the market now at $226 billion from $26 billion in 2013, the 41% year-over-year increase reflects a market that has evolved from just a liquidity tool into a core component of how institutional capital is managed globally.

How Retail Investors Can Gain Exposure

Retail investors cannot directly buy stakes in private equity secondaries. However, they can still benefit from the following:

1. Public Asset Managers

Asset managers have developed dedicated secondary platforms. Such companies generate revenue through management and performance fees for handling billions of dollars in secondary deals.

  • Blackstone Inc. (NYSE:BX) operates one of the largest secondary platforms globally through its Strategic Partners business.
  • Ares Management Corp. (NYSE:ARES) has expanded its secondaries and credit strategies, leveraging opportunities created by demand for flexible financing.
  • Blue Owl Capital Inc. (NYSE:OWL) is an expert in GP-led secondary investments and continuation funds.

By owning shares in these companies, retail investors gain indirect exposure to secondary deal flow, fee income, and long-term asset appreciation.

2. Listed Private Equity Funds and Business Development Companies (BDCs)

Some publicly traded funds and BDCs allocate capital to private equity or secondary strategies. While structures vary, they essentially offer dividends, exposure to private assets, and professional management.

However, retail investors should carefully review portfolio composition, as not all funds focus on secondaries.

3. Earnings and Assets Under Management (AUM)

Retail investors can evaluate key performance indicators that reflect both stability and growth potential. For instance,

  • AUM provides insight into the firm's scale and market presence. 
  • Fee-related earnings are equally critical, as they represent a more stable and predictable source of income compared to performance-based returns.
  • Deployment pace offers a clear view of how actively a firm is putting capital to work, which can signal confidence in market opportunities. 

Consistent growth across these metrics generally indicates stronger positioning and competitiveness within the secondary market.

Risks to Consider

The secondary market is not without risk. Private assets valuations rely on periodic estimates, models, or comparable transactions. This can make it harder to determine their true, current value, especially during volatile periods. As a result, investors may face a lag between actual market conditions and reported valuations, which can obscure risks or overstate stability.

In addition, their demand often increases when exit opportunities are limited. If the IPO market rebounds and companies can more easily go public, investors may prefer direct exits rather than selling stakes on the secondary market. This shift can reduce deal flow and pricing advantages that secondary buyers typically benefit from.

Many asset managers depend on fee-related income, which is influenced by factors such as asset growth, investor commitments, and overall market conditions. During downturns or periods of reduced activity, fee income can decline, affecting the firm's profitability and financial stability.

Bottom Line

The $226 billion milestone of the secondary market for private deals demonstrates how institutional capital is managed, turning what was once a liquidity solution into a core investment strategy. Although retail investors cannot directly access these deals, they can still participate by investing in publicly listed asset managers and funds that specialize in secondaries. By focusing on firms with strong assets under management, stable fee income, and active capital deployment, investors can gain indirect exposure to this expanding market. However, like other investments, it is important to balance the opportunity with an understanding of valuation uncertainty, market cycles, and fee-related risks.

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Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.