Why private equity?
“The most indepth research continues to affirm that, by nearly any measure, private equity outperforms public market equivalents.”
~ McKinsey Global* (past performance is not indicative of future performance).
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The rise of private equity
By nearly any measure, private equity continues to outperform public market equivalents, even during one of the longest-ever bull markets in public equities (past performance is not indicative of future performance).*
This performance has seen a demand for private equity increase ten-fold since 2000, outpacing capitalisation in public equities by nearly threefold over the same period.*
To date, it has been large institutions that have benefited from the performance and diversification that such private equity funds provide.
It looks different, and that's the point
The 'J-curve'
In general, private equity funds do not perform the same way as other assets you may be used to investing in. Typically, they may follow a 'j-curve'. This means there is usually a dip in the value of the investment during the initial years as new assets or investment are acquired by the manager. It takes time to see results - this is why it is 'patient money'.
To learn more about private markets, head over to our Education Hub.
Liquidity
Traditionally, private equity and private market funds are illiquid, meaning there is little ability to exit until the fund matures. It is illiquid because the assets that comprise the fund are typically not easily bought and sold, nor do the managers want to sell before they have had the ability to implement their strategy, which may take time.
Typically private market investments can be between 5 and 10+ years. You should invest with that in mind. To learn more about private markets, head over to our Education Hub.
Capital calls
Typically, when you invest in a private market fund, you commit to invest a certain amount (usually referred to as the “Commited Capital”). However, generally, the total amount you commit is not payable on day one. It may be ‘called’ over a period of time (sometimes years).
The reason is a manager usually takes some time to find all the assets that will make up the fund. For example, the fund manager may focus on buying certain companies. However, it is unlikely on day one of the fund the manager knows all the companies it will ultimately buy. Therefore, when seeking funds from investors, a fund manager does not need all the capital at once. A capital call describes the trigger point at which a manager requires investors to pay a portion of, or in some cases all of, the money they committed to paying to the manager. The called capital allows the manager to complete an investment purchase (i.e. buy a property or company, depending on the investment thesis of a fund). A capital call may also be referred to as a "draw down".
To learn more about private markets, head over to our Education Hub.
Institutions have for years been investing with the world’s largest asset managers in their private market funds. We want you to have the same level of access. We’re here to connect you with what was previously a highly exclusive investment opportunity.
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