The Private Assets Held in Public Companies

Shareholders of some of the most widely owned stocks are investing indirectly in private equity and debt. When you purchase through links on our site, we may earn an affiliate commission. Here’s how it works. Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.You are now subscribedYour newsletter sign-up was successfulWant to add more newsletters?Delivered dailyKiplinger TodayProfit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more delivered daily. 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Private assets may even be an option in your 401(k) soon, per an August White House executive order to make them more accessible to individual investors.These investments can provide portfolio diversification and above-average returns — but they come with formidable caveats: They’re complex, less than transparent, illiquid and sport high fees.Still, you might be feeling some FOMO if you’re not partaking in the latest portfolio craze.Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special IssuesProfit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.Profit and prosper with the best of expert advice - straight to your e-mail.But maybe you are after all. New research from asset management firm Dimensional Fund Advisors found that the 20 largest U.S. public companies by market value collectively had about $96 billion to $157 billion invested in private companies at the end of 2024, according to financial statements.That means if you own those companies (and anyone with a stake in the S&P 500 owns a good chunk), you’ve got an indirect stake in private markets, too.For instance, in 2024, according to DFA, Amazon.com invested $5.3 billion in Anthropic, the startup known for its artificial intelligence assistant, Claude, and planned to invest another $2.7 billion by the end of 2025.The Wall Street Journal recently broke the news that Amazon was in talks to invest up to $50 billion in OpenAI, the firm behind ChatGPT. As for Anthropic, other tech giants, including Alphabet, Microsoft and Nvidia, have stakes as well. Moreover, public companies gain exposure to private markets via venture capital partners or in-house divisions, or through wholly owned subsidiaries. Alphabet shareholders, for example, have indirect access to GV, formerly Google Ventures, which means they also have indirect exposure to roughly $10 billion in assets managed by the private equity unit, including a stake in Stripe, a payments processor.Other large companies with VC arms include Nvidia (NVDA), Microsoft (MSFT), Amazon (AMZN) and Eli Lilly (LLY).Measuring the degree to which these public companies hold private assets is an inexact science, says Kaitlin Hendrix, director of asset allocation research at DFA. “We’re limited to what we can find in accounting statements,” she says, and companies account for private investments in a variety of ways.As a result, DFA came up with an estimated range of private-asset holdings for the companies they examined, including a lower, conservative estimate and a more aggressive one.But it’s likely, she adds, that some private ownership is not captured by the research, including ownership beyond the largest companies. “There’s quite a bit of the market unaccounted for,” she says. The ExxonMobil Building (formerly the Humble Building) was built in 1963 in Houston, Texas. The building is headquarters to ExxonMobil, one of the largest corporations in America. This International style structure was designed by architects Welton Becket and Associates. (Photo by James Leynse/Corbis via Getty Images)ExxonMobil (XOM) had the biggest stake in private assets, with as much as $41.4 billion invested, according to the upper bound of DFA’s estimate. That’s followed by Alphabet (GOOGL), with as much as $40.9 billion; Amazon ($18.7 billion); Berkshire Hathaway (BRK.B) and Microsoft ($10.1 billion each); JPMorgan Chase (JPM) ($9.1 billion); and UnitedHealth Group (UNH) ($8.7 billion).Investors who own these public companies, says Hendrix, “can take comfort in knowing they have exposure to private companies without having to deal with meaningful friction when it comes to access, fees and liquidity.”You can also open the back door to private assets by investing through a reputable mutual fund that owns some. For example, T.

Rowe Price Global Technology (PRGTX) and Fidelity Blue Chip Growth (FBGRX), both members of the Kiplinger 25, the list of our favorite actively managed no-load funds, have stakes in private AI companies, including Anthropic and Databricks.Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.Anne Kates Smith brings Wall Street to Main Street, with decades of experience covering investments and personal finance for real people trying to navigate fast-changing markets, preserve financial security or plan for the future. She oversees the magazine's investing coverage, authors Kiplinger’s biannual stock-market outlooks and writes the "Your Mind and Your Money" column, a take on behavioral finance and how investors can get out of their own way. Smith began her journalism career as a writer and columnist for USA Today. Prior to joining Kiplinger, she was a senior editor at U.S. News & World Report and a contributing columnist for TheStreet. Smith is a graduate of St. John's College in Annapolis, Md., the third-oldest college in America.