Private banks are under pressure to deliver stronger diversification and more resilient portfolios at a time when traditional asset classes are increasingly correlated. Clients want stability, improved long‑term returns and access to strategies that behave differently from public markets. Yet the biggest obstacle remains unchanged: private market access is still difficult to scale, and liquidity expectations continue to slow adoption across discretionary and advisory platforms.
Nicolas Bickel, Group Head of Investment Private Banking and CIO at Edmond de Rothschild, joined us at FundForum 2026 to discuss how private markets enhance resilience, where bottlenecks persist and what needs to change for private banks to integrate these strategies responsibly.
Private markets as a source of true portfolio optimisation
Nicolas explains that private markets are not just a diversification tool. They are an optimisation tool. Correlations across traditional asset classes have risen, weakening the diversification investors once relied on. Private markets behave differently from the business cycle and offer return profiles that liquid markets cannot replicate. For clients with sufficient wealth and no immediate liquidity needs, excluding private markets would be a mistake.
He emphasises that private markets add value precisely because they are less correlated, more stable in stressed environments and capable of delivering long‑term return premiums. The challenge is not convincing clients of the benefits. It is building access models that work within the constraints of private banking.
Liquidity expectations remain the biggest bottleneck
The most persistent barrier is liquidity. Private clients want the reassurance that they can access their money quickly, even if they do not intend to withdraw it. Regulation reinforces this expectation by requiring certain levels of liquidity within portfolios. This creates tension when introducing illiquid assets that may remain in place for seven, ten or even twelve years.
Nicolas highlights that performance measurement adds another layer of complexity. Liquid portfolios rely on time‑weighted returns, while private markets use internal rate of return. Combining these metrics within a single portfolio creates confusion for clients and operational challenges for advisors.
Fees also remain a headwind. Clients question why they should pay close to one percent for a discretionary portfolio that includes a portion of assets that will not move for a decade. These structural issues slow the integration of private markets into traditional mandates.
Why forced integration still falls short
Nicolas is clear that the industry’s current approach to integrating private markets into liquid portfolios is not yet efficient. Semi‑liquid and evergreen structures offer promise, but they are not universally suitable. Some credit strategies may work well in semi‑liquid wrappers, but private equity as a whole does not fit naturally into these formats.
Rather than forcing illiquid assets into liquid structures, Nicolas prefers a dual‑portfolio approach. One portfolio is dedicated to private markets, capturing the full efficiency of closed‑end funds. The other remains a traditional liquid discretionary or advisory portfolio. This avoids compromising risk discipline, liquidity expectations or performance clarity.
In his view, trying to make illiquid assets behave like liquid ones is forcing a square into a circle. The better solution is to combine two portfolios that each operate as they are designed to.
Innovation is advancing, but not all solutions are ready
Product innovation is accelerating, but Nicolas cautions that not all developments will deliver meaningful improvements. Some semi‑liquid structures offer accessibility for clients who cannot reach master funds or feeder funds. Others risk overselling liquidity and underdelivering on return potential.
He believes the industry should focus on improving wrappers rather than transforming closed‑end funds into liquid products. The most impactful innovation will come from educating clients early in the relationship. If clients understand their liquidity needs and wealth surface, they can combine liquid assets with private markets more effectively, without relying on products that promise liquidity at the expense of performance.
The path forward for private banks
Private banks face a convergence of structural pressures: rising correlations, liquidity expectations, fee scrutiny, mismatched performance metrics and rapid product innovation. Nicolas’s message is clear. The firms that succeed will be those that build responsible access models, educate clients early and avoid forcing illiquid strategies into structures that compromise their value.
Private markets are becoming essential for long‑term resilience. The challenge now is building the operational, regulatory and client‑experience frameworks that allow private banks to scale access without compromising discipline.
