Inside Alts: Neuberger's Tony Tutrone on private market fundamentals

Summary

Neuberger's global head of private markets Tony Tutrone discusses the retail push into private markets, redemption pressures in private credit, AI's impact on software companies, and the importance of manager selection. He argues private equity will outperform public markets and advises a bias toward small/mid-cap PE for outsized returns.

• Retail investors need exposure to private markets for diversification and access to growth companies not listed publicly.
• Redemption requests in private credit are elevated and will likely continue, driven by negative press and investor unease.
• No systemic defaults from AI yet; software companies that leverage AI effectively can thrive.
• Private equity is expected to beat consensus S&P 500 returns of 5–7% going forward.
• Investors should overweight small and mid-cap private equity funds for highest returns, as mega funds have become crowded and returns compressed.
• Manager selection is critical with increasing dispersion; track record, operational value creation, and AI adoption are key criteria.
• A shakeout is likely among private credit managers who were aggressive in 2021-2022, but disciplined firms will outperform.