Public markets are concentrated and pricey. The money is moving private

The public market problem

Apollo's case for rebalancing starts with a valuation: the S&P 500's Shiller CAPE ratio is approximately 40 times earnings, against a 30-year average of 29 times. Most investors are overexposed to equities after three years of market growth, the firm argues, and the traditional 60/40 portfolio is under pressure because public bonds have lost much of their diversifying power. The 36-month correlation between US stocks and bonds peaked near 0.7 in 2024 and remains around 0.5. m:…8712

The bond side of that portfolio has its own problem. The Bloomberg US Bond Index fell 3.5% in the third quarter of 2026, and Treasuries now account for approximately 46% of the index. Apollo's answer is to rebalance into private market strategies, direct lending and hybrid securities such as preferreds and converts, which the firm says offer downside protection while keeping equity-like return potential. Floating-rate private credit, it adds, should perform better in a rising-rate environment. m:…8712

The shift is not theoretical: 85% of US companies with $100 million or more in revenue are private, so the public market is a narrowing window on the economy. And the capital cycle feeding the AI build-out is itself increasingly private in character. AI-related borrowing has reached more than $300 billion in 2026. The money funding the biggest investment theme of the decade is, in large part, not passing through public equity markets at all. m:…8712

The money is already moving

The flows confirm the direction. T. Rowe Price reported $1.83 trillion in assets under management as of October 31, 2026, but net outflows of $10.8 billion during October, from a client base whose assets are about two-thirds retirement-related. Meanwhile Hamilton Lane, a private-markets manager, expanded its infrastructure team with three senior appointments and reported $111.7 billion in infrastructure assets under management and supervision, with $49.4 billion in transaction deal flow in the first half of 2026 and more than $1.2 billion deployed across discretionary transactions. m:…2540 m:…1714

PGIM's new research series makes the parallel case for emerging markets: the opportunity set is broader, more differentiated and more resilient than the benchmark suggests, and the series will cover shifting supply chains, EM debt, equities, private markets and portfolio construction. Its sharpest observation is about the US itself. The country could spend as much of its budget servicing debt as a median high-yield emerging market country within a few years. m:…5375

The risk map is changing

Lazard reaches a similar conclusion from the risk side. The firm argues the emerging markets label is a flawed marketing term, and tracks triple-down days, days when a country's equities fall, its 10-year yield rises and its currency weakens at once. Triple-down days have risen in developed markets over the past decade while holding steady or falling in emerging ones; Germany recorded the most of any country in the sample in March 2026, after the Iran war energy shock, and the UK's highest count came in 2022. The US and the euro area, together with China, accounted for roughly three-quarters of the increase in global debt over the past year. m:…9779

The through-line is that the old map, safe developed markets, risky emerging ones, public equities for growth, bonds for safety, no longer describes where the risk or the money sits. The MSCI Emerging Markets Index itself is dominated by three North Asian economies, with Taiwan, South Korea and China making up 70% of it. Investors rebalancing now are not just changing asset classes; they are changing which countries and which markets they consider safe. m:…9779 m:…8712