JPMorgan Chase CEO Dimon Skeptical of Private Markets Growth

Jamie Dimon

Jamie Dimon, CEO of JPMorgan Chase & Co., on Tuesday criticized institutional investors for their increasingly large focus on private markets and also noted how the number of public companies in the U.S. has shrunk dramatically since the 1990s.

“From 1996 to today, from 7,600 public companies to 4,500,” Dimon said at a panel at the Council of Institutional Investors’ Fall 2024 Conference in Brooklyn, New York. “It should have gone from 7,600 to 15,000, and private companies—I don’t even know the number in total—have gone from 1,000 to 10,000 in this country. Private markets have grown dramatically, and they don’t have the same transparency and liquidity and research, and you may think that’s a good thing, and there are good attributes, so it’s not a criticism, but is that what you want?”

‘What Is It We Really Want in Our Own Capital Markets?’

Long-term investors, like pension funds and endowments, have increasingly favored alternative asset classes as a source of returns uncorrelated with returns in the public markets and to take advantage of the illiquidity premium that can exist in these investments, which often tie up investors’ money for a long time. Investors that need daily liquidity are often limited to public market assets that trade on exchanges.

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Also, due to the increasing speed of information shared about public companies and trading of their stock, there are few opportunities for investors to gain an information advantage—and earn outsized returns—in those markets. Many investors see more such information advantages in private markets.

Dimon scolded the audience, primarily comprised of senior professionals at institutional asset owners, for its members’ large allocations to the private markets.

“You are all huge causes of that, because you make huge investments in the private side,” Dimon told the crowd. “You talk to us about all the issues that you’re interested in, but when you make huge investments in the private side, you don’t get that kind of transparency, compensation, governance, boards, values and stuff like that, but you foster it, you know.”

Dimon said he would like JPMorgan Chase to be private, as it would reduce some of the headaches and risks associated with operating as a public company.

“I’d love to be private if I could; I don’t know of a public company who wouldn’t say that,” Dimon said. “You have less litigation, less SEC, less frivolous shareholder meetings, more time to focus on long-term things. And I think we should step back and say, what is it we really want in our own capital markets?”

In JPMorgan’s annual CEO letter in April, Dimon warned that public markets were at risk of shrinking further. He criticized the pressure that companies are under to focus on quarterly results, which can lead to good financial decisions or results in the short term, but bad ones in the long term.

In the letter, Dimon also criticized shareholder activism, saying the frivolity of the annual shareholder meeting is one reason why operating as a public company has become less desirable.

Alts Continue Taking Bigger Role

In a separate panel at the conference, public pension fund executives discussed how the investing environment had evolved since the global financial crisis of 2008 through 2009 and how alternative investments became a more important part of their portfolios than ever before.

Many public pension funds and other institutional investors have significantly increased their allocations to alternatives in the last few years. In March, the board of the California Public Employees’ Retirement System approved a plan to increase its private markets assets to 40% of the $502.9 billion portfolio, up from a target of 33%.

“There has been a dramatic decrease in the number of publicly traded companies in the U.S. from its peak in the mid-1990s,” said Tyler Bond, research director at the National Institute on Retirement Security, at a panel discussing the evolution of asset allocations in public plans since the global financial crisis. “The private markets have grown a lot, and there’s much more incentive for public plans to look at investing in the private markets. So that has also contributed to the changes in asset allocations that we have seen since the GFC.”

According to research from CAIA, 20 years ago, private markets accounted for only 6% of global assets under management, or only 6%. In 2024, that figure grew to 15% of global AUM. According to research from Vidrio Financial, capital inflows to alternatives managers grew 19% in 2023.

A survey of 203 institutional investors by Commonfund in April found that 45% of respondents planned to increase their allocations to private equity in the next 12 months; roughly half of those surveyed believed private equity would deliver the best returns over the next year.