Private Equity Funds Gaining Traction With Advisors

Private equity funds surge in popularity among advisors

What are private equity funds?

Private equity funds are investment funds that pool money from investors to invest in private companies, typically those that are not publicly traded. Private equity funds can invest in a variety of assets, including stocks, bonds, real estate, and infrastructure.

Types of private equity funds

There are several types of private equity funds, including:

• Buyout funds: These funds acquire controlling stakes in companies with the goal of improving their performance and then selling them for a profit.
• Growth equity funds: These funds invest in companies with high growth potential.
• Venture capital funds: These funds invest in early-stage companies.
• Real estate private equity funds: These funds invest in real estate assets.
• Infrastructure private equity funds: These funds invest in infrastructure assets.

Why are private equity funds becoming more popular with advisors?

There are several reasons why private equity funds are becoming more popular with advisors.

• Returns: Private equity funds have the potential to generate high returns for investors. According to a study by the Private Equity Growth Capital Council, the median private equity fund returned 11.5% per year over the 20-year period ending in 2019.
• Diversification: Private equity funds can help advisors diversify their clients' portfolios. Private equity investments are typically not correlated with the performance of the stock market, so they can provide a hedge against market downturns.
• Access to illiquid assets: Private equity funds offer advisors access to illiquid assets, which can be difficult for individual investors to access.

How can advisors invest in private equity funds?

Advisors can invest in private equity funds in a variety of ways.

• Direct investment: Advisors can invest directly in private equity funds by purchasing shares or units in the fund.
• Fund of funds: Advisors can also invest in private equity funds through fund of funds. Fund of funds are investment funds that invest in a portfolio of private equity funds.
• Separate accounts: Advisors can also invest in private equity funds through separate accounts. Separate accounts are customized investment portfolios that are managed by a private equity fund manager on behalf of an individual investor or group of investors.

Conclusion

Private equity funds are becoming increasingly popular with advisors due to their potential to generate high returns, diversify portfolios, and provide access to illiquid assets. Advisors can invest in private equity funds in a variety of ways, including direct investment, fund of funds, and separate accounts.