FTSE Russell Convenes | Episode 3, Season 6

Inside private markets: The trends shaping the future

Sept 2, 2026

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In this episode of FTSE Convenes, Gerald Toledano speaks with Mike McCabe, Head of Strategy at StepStone, about the evolving private markets landscape. They discuss the growing demand for transparency, improved risk measurement, liquidity management and the increasing role of data, analytics and indices in helping investors better understand and manage private market exposure. As access to private markets expands, investor education remains a key priority.

Key takeaways include:

  • Why private markets are being held to higher standards of transparency and comparability • How investors are moving from commitment pacing to exposure management
  • Lessons learned from recent liquidity stress events
  • The role of data, indices and analytics in strengthening portfolio decision-making • Why investor education is essential as private market access expands

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I think this evolution within the evergreenand wealth managementchannels is really going to hinge on the importance of education. Hello and welcome FTSE Russell Convenes.I'm Gerald Toledano,I'm the Group Head of Equityand Alternative Indicesat FTSE Russell and todayI'm joined by Mike McCabe who's a partner at StepStone.We're going to talk about private markets and indices.Welcome, Mike.Thank you for having me Gerald. Well, before we start going into market,why don't you take a moment to introduce usa little bit more to StepStone.You sit at the intersection of portfolio construction,investment, advisory, as well as dataand analytics. StepStone sits at the centreof a very powerful flywheelwithin the private markets ecosystem globally speaking, with a total capitalresponsibility of just under $1 trillion,nearly $230 billion of assets under management,with 1300 plus employees across 31 different offices.Our stated purpose is really to be the trusted partnerof choice to asset owners who are allocating capitalto the private markets and general partnerswho are using this capital to make direct investmentsin both the equity and debt of private companies.As such, were often described as an asset managerwith a leading data and analytics platform acrossprivate equity, venture capital, private credit real estate and infrastructure.What that means in practice is we see the marketfrom a number of different angles, from the GP level,from the LP level, from the asset owner perspectiveand increasingly the wealthand evergreen channel and that gives us a verypractical view of what investors are trying to solve.Whether it's access, selection, pacing,liquidity, valuation, benchmarkingand the total portfoliointegration of both private and public securities.So I would describe StepStone's role as reallybeing helpful to investors who are moving private marketsfrom a bespoke allocation or a commitment-driven processtoward a more scalable, measurable and portfolioconstruction capability. So now, looking at the marketand looking back at the lastyear, the last 12 months, what do you thinkhas been the most different and what has not changedas much as people would believe?It's been quite a year for all of usin the private markets and whatfeels meaningfully different this year from a year ago,is the level of scrutiny around structure.A year ago,the conversationwas really framed around fundraising, exits,pacing and return outlookand those are still front of mind topics.But what we're seeingtoday is a much broader conversation,which in parthas led to the partnershipbetween StepStone and FTSE Russell.Investors are now asking much tougher questions.What are my assets worth?How are they being valued?How do I compare them to the public markets?What does my liquidity profile really look like?And how do my private marketinvestments fit within my total portfolio?Now what has not changedis the long-term investment case for the private markets.Private markets still provide access to private companies,assets, loans and strategies that are still not availableto the public markets and the ability to underwrite,source, structure and manage complex assetsstill is very much a priority within the private markets.what has changed more than anything isthat the asset class is beingasked to operate with more transparency,more comparability and more disciplineAnd Mike,there has been many more discussions around risk measurement.People are asking if the valuationof private market portfolio truly reflectsthe underneath value.People are also asking about the reported volatilityand whether or not it's an accurate pictureof economic reality.Do you have some more insight on this topicand is there still an important gap to bridge?The data that we're seeingis certainly giving us a clearer picture.But there's also a gap, as you point out.Like the private markets were never as low volas the reported marks would have suggested over the yearsand some of that smoothness that we've all experiencedcomes in partfrom the underlying nature of the long-term assetsthat the private markets buy and hold.But also some of the gap reflectsthe valuation lag and the cadence of reporting.Now the progress here is really better data,more frequent valuation and the unsmoothing techniquesthat allow investors to discernfrom reported volatility and the true underlyingeconomic risk and that's healthy.We're all going to benefit from better data.More data is better than less data here.But we shouldn't confuse better measurementwith perfect measurement and these are stillprivate assets that require judgement,they require underwriting and they require context.That doesn't change.You know, said differently Gerald, better marks don'tnecessarily make private assets more liquid.It just provides investors with more visibilityinto the riskand I think that's really whatthe nature of our partnership is tryingto bring to the markets for the first time.The point isn't about perfection.The point is about better directionality. At the same time.We've seen some pockets of relativelyinteresting stress events in the market,particularly around liquidity management.We've had some gate being imposedon some semi-liquid fund and evergreen structure.We've also seensome period of stress on the non-traded BDC market.What are the lessons learned from investorsfrom these eventsand do you think they constitutea structural failure?I would call the eventsfrom this past year, as a structural test.Certainly not a structural failure by any means.The semi-liquid vehicles are intended and designedto provide periodic liquidity, not daily liquidity.So when redemptions were on the rise earlier this year,the right question is not whether a vehicle gated?The question or the betterquestion is whether the liquidity terms,the underlying assets, the investor baseand the communication were all aligned.So what happened this past year, I would say,or characterise as sentiment-drivenor even perhaps headline-driven,but the episode revealed somethingvery real at the same time.The industry has to be more precise about the differencebetween a liquidity feature and a liquidity guarantee.A gate is not automatically a failure.Sometimes it's the mechanism working as it's designed.But the failure would be if investors believedthey actually own something more liquid than it was.That's why education is so important here.At the same time, liquidity has to come from somewhere.It can come from cash, it can come from asset sales,it can come from secondaries,it can come from portfolio maturities.But liquidity does not come from the label semi-liquid.And bringing that into real-life portfolio managementwith an environment that requiresmuch more dynamic portfolio allocation,how are data, portfolio analytics, real-time toolstruly changing the way you are exercisingyour expertise and also as the marketexpanding into new clients segments, are things changingstructurally from this risk analysis and framework?Well Gerald, this questionyou're asking really brings into focus the rationalebehind the partnership that FTSE Russelland StepStone created about a year ago.Historically private markets portfolio constructionwas heavily commitment-driven or allocationbased-driven and the question that investors would askthemselves would be, how much should I commit this year?To which managers?Which strategies, which vintage years?And while those questions are still front of mind,better data is allowing investorsto move away from just commitment pacingtoward a broader exposure management approach.So the more important questions we're facing noware, what do I actually own and what is it worth?And what risk factors am I carrying in my portfolio?What does my liquidity situationlook like under a stressful situation?And how does my private market portfolio interactwith my public market portfolio?Am I overexposed or underexposedin certain parts of the market?And that changes the discipline.It moves the private markets from a backward-lookingreporting discipline towarda more forward-looking portfolio management exercise.And as you point out, Gerald, as the end usersor the broader market starts to expand,the infrastructure of the private markets has to evolve.Wealth, defined contribution,evergreen and increasingly modelportfolios will require more standardisation.It will require more frequent valuation, clearer liquidity,a better understanding of what is owned and a strongerand most importantly, a stronger investor education.I think this evolution within the evergreenand wealth managementchannels is really going to hinge on the importance of education.Access alone is not democratisation.Responsible access is democratisation.Data is moving the industry from commitment pacing toexposure management.Mike, we're seeing the emergenceof more frequent portfolio valuation methodologies.We are also seeing the emergence and the creation ofdaily indices, real-time portfolio analytics.Is this toolkit nowtruly operationally available or do they remainstill relatively theoretical?The capabilities and toolsthat are being developed today are most genuinely usefulin terms of both portfolio construction and governance.Frequent valuation, exposure monitoring, liquidity stress testing and benchmark awareness.These are all toolsthat are increasingly practical for everydayinvesting in the private markets.These tools are increasingly practicalbecause they help investors understand directionality,they understand risk better and they understand portfoliointeraction between liquid and illiquid securities.But where I would be a little bitcautious is treating daily valuation, you know,as if it makes private markets trade like public assets.That's not the intention, at least not now.Daily marks are useful for measurement,monitoring and model portfolios.You know they're not a substitutefor liquidity underwriting or judgement.So I think the practical use case is not,can I trade private markets daily like the public markets?The practical use case for these daily valuationtools that we're creating is really helping investorsask this question, can I understandmy portfolio better, easier and with more consistency?Well Mike, thank you very much for joining us todayand thanks again for the continued partnership.Thank you for having me, Gerald.It's been a pleasure.

Video recorded on June 01, 2026.

The FTSE Russell Convenes series brings independent and unvarnished insights and opinions from experts at our World Investment Forum, including practitioners, investors, academics and LSEG colleagues.

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