The Index Fund Pioneer Just Put a Number on Private Market Allocation

Vanguard spent fifty years telling you to own the whole market. Last month they acknowledged part of it has moved.

This spring, SpaceX, OpenAI and Anthropic together passed $3 trillion in value. As of June, none of them were in your index fund.  

Last month, Vanguard — the firm that spent fifty years telling investors to own the whole market cheaply and leave it alone — published a framework for how much private market equity belongs in a portfolio. The range runs to 40% of total equity allocation.

The number is interesting, but even more telling is seeing it coming from a low-cost index pioneer Vanguard.

Why it matters coming from Vanguard

The case for indexing rests on a quiet assumption: the public market is the whole market. For most of the last fifty years that was close enough to true. Companies listed early, and their years of compounding happened in front of public investors.

That is no longer the case. Companies with access to abundant private capital can fund growth for years without listing, and the most exceptional ones increasingly do. An investor who owns only public equities today owns a narrower slice of the economy than the same portfolio did a generation ago. Not because the investor changed anything — because the market did.

A firm whose whole thesis is "own the market" has to have a view when part of the market moves out of sight. Now it does.

The framework

Source: Vanguard, "The global markets are evolving. How are you thinking about private equity allocations?" (August 14, 2026).

The sentence that's easy to miss

Vanguard measures private market equity as a share of your equity allocation, not your whole portfolio.

That sounds like a technicality. It isn't. It changes the question.

Measured against your whole portfolio, private companies look like something you add — a small, unfamiliar slice off to the side. Measured against your equity, they look like what they are: a decision about where your equity risk sits.

A share of a private company is equity. It's a claim on an operating business that rises when the business creates value and falls when it doesn't. It is exposed to the same customers, same interest rates, same labor market as a listed company in the same industry. What's different is liquidity and how it's priced and accessed, not the asset itself. 

So the question isn't how much of this new thing should I add? 

Rather, it’s of the equity risk I've already decided to take, how much should sit in companies that haven't listed yet?

That's a question you can actually answer, because it starts from a decision you've already made.

Three markets, one axis

Once private companies count as equity, growth equity lives in three places:

Public: deep, liquid, priced every second, and where most portfolios sit entirely.

Late-stage private: companies at real scale, with substantial revenue and multibillion-dollar valuations, that haven't listed.

Venture-stage private: early, unproven, where the widest range of outcomes lives.

Not every company travels this path, and most venture-backed companies never reach late stage. But for the most exceptional growth companies, many of the years of biggest value creation now happen in that middle market. Most investors have zero exposure there — not by decision, but by default. Vanguard's framing puts all three markets on one axis and makes the allocation a matter of proportion, not category.

Same framework, different answers

Vanguard is clear there's no one-size-fits-all number. What drives it is your situation: when you need cash, what you're willing to pay, how you handle irregular liquidity. Three illustrations:

The early-career household has decades of horizon and the least available capital, much of it inside retirement accounts. The horizon argues for exposure; the balance sheet argues for patience.

The mid-career builder has both horizon and liquidity, and is still adding to the portfolio from income rather than drawing on it. The widest room to move.

The legacy-minded retiree has already decided this capital is for children or grandchildren. The relevant horizon belongs to someone decades younger, and illiquidity stops being a cost. The money wasn't going anywhere regardless.

One framework, three defensible answers. That's Vanguard's point, and it's why they say a financial professional should help you land on yours.

What the framework doesn't do

It doesn't pick a strategy. It covers private equity as an asset class and doesn't split venture from late-stage, so anyone citing it in support of one particular approach — including us — is extending it past what it says. And it doesn't produce your number. The tiers describe types of investors, not a calculation.

What to do with it

Equity used to mean public equity. It doesn't anymore. The same growth exposure now sits in three places — public, late-stage private, venture — and most portfolios hold all of it in the first one.

That split may still be right for you. Zero is one of Vanguard's four answers. But it's worth arriving at on purpose rather than inheriting it from a market that changed while the portfolio didn't.

If you want to think that through with us — where late-stage private companies fit in your equity, and what access actually looks like — book fifteen minutes here.

And if you'd like our next late-stage memo when it goes out, fill out the form below.

The firm that invented indexing now thinks this is a question worth asking. So do we.

Third-party content. Allocation tiers from Vanguard, "The global markets are evolving. How are you thinking about private equity allocations?" (August 14, 2026), available at investor.vanguard.com. Reproduced for informational purposes. Vanguard's framework addresses private equity as an asset class generally; it does not address late-stage private secondaries specifically, and it does not reference, evaluate, or endorse PrePublic Equity Partners or any PEP fund.

No affiliation or endorsement. Vanguard® is a registered trademark of The Vanguard Group, Inc. PrePublic Equity Partners is not affiliated with, sponsored by, endorsed by, or in any way associated with The Vanguard Group, Inc. The Vanguard Group has not reviewed or approved this communication.

Not a recommendation. Vanguard states there is no one-size-fits-all approach and that allocations are individualized based on risk tolerance, cash flow needs, investment goals, and desired allocations. Nothing here is a recommendation that any allocation level is appropriate for you. PEP does not provide investment, legal, or tax advice.

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RESEARCH DISCLOSURE This article is for informational and educational purposes only. It represents independent thematic analysis prepared by PrePublic Equity Partners ("PEP") and is intended to discuss industry trends and company dynamics in the private markets. This content does not constitute investment advice, a recommendation, or a solicitation to buy or sell any security or investment product. PEP is not a registered investment adviser or broker-dealer. Any offer or solicitation relating to securities will be made only through definitive offering documents to eligible investors. PEP and its affiliates may hold financial interests in companies discussed herein and reserve the right to trade such positions at any time without notice. Private market investing involves significant risk, including illiquidity and potential loss of principal. All data is sourced from publicly available information and has not been independently verified.

IMPORTANT DISCLOSURE This content is published by PrePublic Equity Partners ("PEP") for informational and educational purposes only. It does not constitute an offer to sell, or solicitation of an offer to buy, any security. No such offer or solicitation is made except by means of a confidential Private Placement Memorandum or other definitive offering documents delivered to eligible investors only. PEP is not a registered investment adviser with the SEC or any state securities regulator. Nothing in this article should be construed as personalized investment, financial, legal, or tax advice. All views are the opinions of the author as of the date of publication and are subject to change without notice. Private market and pre-IPO investing involves a high degree of risk, including illiquidity, potential total loss of principal, and reliance on unverified private company data. Past analytical observations are not indicative of future results. PEP and its affiliates, officers, or employees may hold financial interests in companies discussed in this article. PEP reserves the right to buy or sell such positions at any time without notice. PEP does not receive compensation from issuers mentioned in its research. PEP is an independently operated subsidiary of Alumni Ventures, LLC.