A sure sign that a type of asset has gone big-time is when there’s an index to track it. That’s now true for private assets. A subsidiary of the London Stock Exchange has launched a series of indexes to track private investment funds.

"Private investment" is a phrase we've been hearing a lot — the Trump administration is trying to make it easier to add it to your 401(k). The "private credit" market has been catching serious side-eye from Jamie Dimon and others. But what the heck does "private" even mean in these contexts?

There are two parts to the financial system — public and private. But in UMass Amherst professor Lenore Palladino’s view, “what we really should call the two different parts of the financial system are ‘regulated’ and ‘unregulated.’”

On what she calls the regulated side are public companies, whose shares are traded on stock exchanges. They’re required to tell investors all kinds of things about their business. Banks, too, are subject to regulations around the deposits they hold and the loans they make.

But as for private firms? “They are not required to disclose nearly any information publicly, and we, as the public, can only see information about what's happening in the private markets at the aggregate level,” Palladino said.

That can make it harder for investors to know what kinds of risks might lie in private investments. Private firms do have to play by some rules, though, per Arthur Laby, a professor at Rutgers Law School.

“All securities, all debt and equity sales — regardless of whether they are public or private — are still subject to the general anti-fraud rules of the federal securities laws,” he said. “So it's not as if the private markets are the Wild West.”

Staying out of the public eye can allow companies to think a bit more long-term, rather than focusing on quarterly results. Private firms have also started doing more lending, especially since new federal rules were placed on banks in the wake of the 2008 financial crisis, said Josh Lerner, an economist at Harvard Business School.

“It became increasingly hard for banks to lend to smaller and riskier companies,” he said.

Private credit firms have filled the void by lending out investors’ money, said Evan Gunter, who focuses on private markets at S&P Global Ratings. For borrowers, “there's fewer parties involved in the negotiation for that debt, so the debt can be more tailored to meet their own specific needs.”

They usually pay higher interest, however. Meanwhile, investors in private credit receive a higher yield — but the investment isn’t liquid, said Harvard’s Lerner.

“If one has one's money tied up in something that is illiquid very long-term, it can make it very hard to access that money in a quick period,” he said.

And that’s something more people might experience if they invest retirement funds in private assets, as the Trump administration is moving to allow.