"All investments involve risk, and the risk in different asset classes differs. This is why it matters that firms have the right governance in place to oversee different types of investments.
"Every firm or trustee will have to decide what's right in terms of the asset mix and also what's right in terms of what they are able to oversee. Some types of investment will require more active oversight and governance."
A big aspect of concern with private markets is the private nature of the assets themselves. The fear is that investors do not know the details of what they are investing in, and would not necessarily have a chance to challenge the management of the company directly, depending on which kind of investment route they take.
This can either be via an long-term asset fund (LTAF) – an open-ended vehicle that invests in private markets on behalf of DC funds, offering more liquidity than investing direct; a private market fund such as a private equity fund; or co-investing directly into a private market asset, which requires an in-house investment team.
However, anyone involved in deals in the private market space insists that they do their due diligence, and they know what their client's money is invested in.
Herbst at Norton Rose Fulbright says: "You have to disclose what you are required to disclose. Disclosure for private equity buyers is just as great as in a public deal. The difference is that it's private.
"On a large transaction there will be an investment bank who will produce a detailed investment analysis, and put an auction up and approach three or four houses.
"In any large transaction, there will be an investment bank on the other side who will produce a thorough due diligence analysis, and then you will have interviews with management and that will feed into the due diligence."
David Ramm, partner in the corporate group at law firm Crowell & Moring, who has worked on both IPOs and private deals for small tech firms, says: "VC and private equity lawyers have a good history of knowing where to look and find the problems.
"We will send a full due diligence questionnaire and we expect a company to supply the data on that. It's got pretty much everything on it. We will go through it with a fine-tooth comb. You can try to hide things but most good lawyers can spot it."
Douglas Hansen-Luke, founder and executive chairman of Future Planet Capital, which manages $500mn (£380mn), has a specific process when it comes to the early stage investments.
