How I Made $5000 in the Stock Market

Private Equity Had a Great Story. Investors May Be Tired of Hearing It.

Oct 23, 2025 14:38:00 -0400 by Ian Salisbury | #Private Equity

Shares of alternative-asset managers such as Blackstone are underwater for 2025. (Michael Nagle/Bloomberg)

Key Points

For years, private-equity firms had a great tale to tell to investors. Signs are starting to pile up that the story has played out.

Alternative-asset managers, colloquially referred to as the private-equity industry, have dramatically raised their profile on Wall Street in recent years. There’s now talk about their getting access to millions of Americans’ 401(k) accounts.

Despite the common moniker, much of the recent success has been built around a boom in private credit as opposed to equity. With traditional bonds offering paltry returns, retail investors have piled billions into a new breed of semiliquid funds that promise market-beating yields.

Lately, however, there are signs that the story has entered its baroque phase, as firms have to reach further and further to meet heightened expectations, and some new efforts begin to feel overwrought.

In recent years, alternative-asset managers attracted investors’ attention with stock prices that handily beat the S&P 500. This year they have struggled, with shares of the largest firms—including Blackstone, Apollo Global Management, and KKR —all underwater for 2025.

Wall Street’s new, more skeptical mood was on display Thursday. Blackstone reported distributable earnings, similar to operating earnings, of $1.52 a share, well above the $1.23 analysts expected, and congratulated itself on an “exceptional third quarter, highlighted by outstanding financial results.”

The shares fell more than 5.6% to $153 in early trading. Blackstone declined to comment.

One cloud that has been hanging over the private-credit space is a spate of high-profile bankruptcies, including auto industry companies First Brands and Tricolor. On Blackstone’s conference call executives dismissed these worries as “misinformation,” noting, as others have, that the problems involved bank loans, not private-credit loans.

The fact that Wall Street seems unwilling to swallow this explanation only goes to show the heightened scrutiny alternative-asset firms now face.

While Blackstone earnings garnered attention on Thursday, investment bank Goldman Sachs was also in the news, having launched a new ETF, the Goldman Sachs MSCI World Private Equity Return Tracker, which will trade under the symbol GTPE.

Retail investors have been pouring billions into various private-asset vehicles, such as interval funds, business development companies, and more. But the industry has struggled to come up with a single structure that can satisfy inherently contradictory demands—offering investors a way to easily cash in and out of holdings that are notoriously illiquid.

Goldman Sachs aims to square this circle by investing in publicly traded stocks whose characteristics match the “regional, sectoral, and stylistic exposures” of private-equity investments. In other words, its new ETF has about 20% invested in cash and the rest in a portfolio of mostly U.S. stocks, with top holdings that include Microsoft, Eli Lilly, and Palantir, according to its holdings page.

Why label a fund that is mostly made up of U.S. stocks as “private equity”?

One obvious answer is that its marketing department wanted to capitalize on the lingering buzz around the industry. The fund may or may not succeed, but it’s arrival is clearly a sign that firms are willing to get a little extra creative to hop on a well-developed trend.

In a statement, Goldman said: “Fund materials clearly state that the ETF uses public market equities to deliver private equity-like returns.” The firm also said it offers products with “a range of liquidity profiles to meet investor needs.”

Both developments should give investors pause. Anxious market reactions to otherwise solid earnings reports, the appearance of wannabe retail products—both are signs. It’s past midnight at the party.

Write to Ian Salisbury at ian.salisbury@barrons.com