Account Access. Professional Investor. Most investors are familiar with traditional investments, which include cash and long-only positions in publicly traded stocks and bonds. Alternative investments are comprised of more complex investments and include private strategies focused on illiquid holdings.
Within the private alternatives universe, asset classes include private equity, private credit, real estate and infrastructure. What Is Private Equity? Private equity PE can be defined as equity or equity-like investments made into private companies or assets i. In general, private equity fund managers, also known as general partners GPs , are analogous to the managers of mutual funds, with a key difference being that these general partners construct portfolios of privately held, rather than publicly traded, companies or assets.
Like mutual fund managers, and unlike hedge funds, private equity fund managers acquire long-only interests in underlying companies portfolio companies. Unlike their public-oriented counterparts, however, PE GPs typically hold each of their portfolio companies for several years. Following such multi-year hold periods, a GP will seek to exit its stake in a company or asset at a gain relative to its entry price or valuation through a negotiated sale or initial public offering IPO.
A GP seeks to deliver gains across a portfolio of such companies, making PE funds largely illiquid relative to mutual funds. There are three main strategies within private equityβbuyout, growth equity, and venture capital. All encompass actively constructing and managing portfolios composed of equity interests in privately held companies that are each individually selected in exchange for either a capital investment into a company primary or as a payment to an existing equity holder secondary.
Historically, private equity has been associated primarily with institutional investors and family offices that meet certain requirements for wealth, income, or financial knowledge i. A Closer Look at Opportunistic Multi-Manager Strategies Opportunistic multi-manager strategies offer diversification as well as other potential benefits such as return enhancement, fee mitigation, and better capital velocity. Funds of funds can often invest in co-investments at a fee level lower than what is charged by a primary fund and sometimes offer exposure to hard-to-access private companies.
