An Interview with Cliff Asness: The Illusion of Safety in Private Assets

Cliff Asness again highlights the structural weaknesses he sees in private assets, especially the way reported returns can be artificially smoothed. That smoothing can make risk look lower than it really is and may lead investors to take on more equity exposure than they intend.

He also points to concerns about how private assets behave in drawdowns, where their resilience may not be as strong as marketing suggests. In his view, investors should be careful not to assume privates will provide a reliable cushion when public markets fall.

Another key issue is correlation risk. Private holdings may appear distinct from public equities, but they can still move in similar ways when conditions tighten.

For advisors and investors, the message is to judge privates by their true economic exposure rather than by headline returns alone. The role of these assets should be tested against portfolio objectives, liquidity needs, and real downside behavior before making allocation decisions.