Private Equity performance

Private Equity has outperformed its public market equivalents over the past 30 years. Note, past performance is not a guide to the future. In short, investors who are eligible to participate in these markets have historically been well rewarded.

Data since the late 1990s reveals Private Equity returns have surpassed public equity by 6-8% per annum (see chart below). This can be attributed to longer-term horizons, strategic input from Private Equity partners, the use of borrowing to boost returns and investor compensation for the illiquid nature of these funds.

Imagine you invested $10,000 into a hypothetical basket of Private Equity funds in 1999.

If you’d left this investment and allowed it to compound, you could in theory be sitting on around $200,000 today. That compares with an equivalent return of roughly $37,000 from a global public equities fund (see chart below).

Past performance is not a guide to the future: returns are not guaranteed and capital is at risk. The chart below is for illustrative purposes only.

Private Equity funds have proven comparatively resilient during economic downturns and periods of acute market stress. This was visible during the 'dotcom' bust of 2001/02, the 2008/09 global financial crisis and the more recent 2020 Covid crash (see charts below).

Adding Private Equity to an existing long-term investment portfolio has the potential to improve diversification and risk-adjusted returns, although this is not guaranteed.