The abrupt implementation of President Trump’s aggressive tariff policies has sent global capital markets into a tailspin, with stock and bond indices across major economies suffering sharp declines. Investors now face a dual challenge: navigating wealth contraction risks while identifying asset classes capable of delivering stable, long-term returns. In this environment, private equity (PE) has emerged as a compelling alternative, offering low correlation to traditional markets and the potential to transcend economic cycles through active management and strategic allocation.
The Rise of Private Equity: A $20 Trillion Opportunity
Andy Yin, Managing Director and Head of International Private Markets, projects that the global PE primary investment market will expand from 13trillionin2024∗∗toatleast∗∗20 trillion by 2030, driven by demand for illiquid, high-conviction strategies. Within this growth, private credit and infrastructure are poised to become the fastest-growing segments, reflecting investors’ appetite for yield and stability amid rising interest rates and geopolitical uncertainty.
Apollo Global Management, a pioneer in alternative investments since 1990, exemplifies this trend. With $733 billion in assets under management (AUM) as of September 2024, Apollo has built a reputation for delivering consistent outperformance through disciplined investment frameworks. Its success underscores why PE is increasingly favored by institutional and high-net-worth investors seeking resilience.
Apollo’s Formula for Success: Stability Through Volatility
Apollo’s edge lies in its ability to generate excess returns while minimizing downside risk—a critical trait in today’s markets. Since 2015, the firm has outperformed the MSCI Global Equity Index while maintaining volatility below 4% (a quarter of the index’s volatility). This resilience was evident during the 2020 pandemic: While the S&P 500 plunged 20% in Q1, Apollo’s portfolio declined just 3.4%, finishing the year with an 8% positive return.
Three pillars underpin Apollo’s strategy:
Free Cash Flow Focus: Apollo allocates approximately 80% of investment valuations to stable, predictable free cash flow, prioritizing companies with robust business models and resilient earnings. This reduces reliance on volatile public market multiples and enhances portfolio stability.
Multi-Strategy Diversification: By allocating across private equity, private credit, infrastructure, and real estate, Apollo mitigates the risks of overconcentration. For example, infrastructure investments provide stability during downturns, while private equity capitalizes on growth opportunities in expansions.
Adaptive Risk Management: Apollo’s ability to anticipate market shifts—such as correctly forecasting sustained elevated interest rates—has enabled timely portfolio adjustments. Its minimal leverage strategy in private equity, for instance, reduced interest expenses and preserved returns amid higher borrowing costs.
Aligning Interests: Co-Investment and Liquidity Innovations
Apollo strengthens investor trust by aligning its interests with clients. In one private fund, over 60% of assets come from Apollo’s own capital, demonstrating skin in the game. In 2024, the firm committed an additional $800 million to the fund, reinforcing confidence in its strategy. The fund also offers quarterly redemption options, providing flexibility for investors to manage liquidity needs—a rarity in private markets.
Matthew O’Mara, Apollo Partner and Co-Head of Apollo Aligned Alternatives, notes:
“2025 may be an ideal entry point for private markets. Current conditions present investors with a distinctive opportunity to enhance portfolio construction.”
The Future of Private Equity: Key Insights for Wealth Managers
To unlock private equity’s potential, wealth managers must prioritize:
Manager Selection: Partner with firms like Apollo, which combine deep market insight, disciplined valuation frameworks, and adaptive risk management.
Long-Term Horizon: Embrace the illiquidity premium by committing to multi-year investment cycles.
Thematic Exposure: Target sectors leveraging secular trends (e.g., AI, clean energy, digital infrastructure).
On April 23, Noah’s ARK invites Sachin Khajuria, former Apollo Partner and author of 2+20: Why Private Equity Consistently Outperforms the Market, to the N+ Reading Club in Shanghai. Khajuria, now Founder/CIO of Achilles Global Management, will share insights on:
Generating excess returns in volatile markets
Elite investment strategies for private equity
Emerging opportunities in AI-driven industries
Conclusion: The Path to Resilience
In an era of heightened uncertainty, private equity offers a pathway to stability and growth. By partnering with firms like Apollo—which combine rigorous analysis, strategic diversification, and aligned interests—wealth managers can navigate market turbulence while positioning portfolios for long-term success.
Join the N+ Reading Club on April 23 to explore these strategies and more. The future of wealth management lies in private markets—are you ready?
