Often unfairly reviled, and frequently misunderstood, private equity differs from all other asset classes in various important respects, not least in the nature and timing of its returns, which require a whole new approach for those reared on more traditional investments such as bonds and shares.
Private equity is a critical asset that has become widely accepted as a key component of investment portfolios. Its major virtue is that it delivers attractive risk-adjusted returns with fairly low correlation to equities and bonds.
It avoids frequent mark-to-market trauma while business growth generates wealth over 3-5years.
It has a stable compounded returns as against the need to churn portfolio in public markets to achieve similar returns.