Why smart investors are allocating to private markets and how we’ve solved the liquidity challenge
For decades, private equity was the exclusive domain of large pension funds, endowments, and sovereign wealth funds. Today, that is changing and for good reason. Private equity has compiled one of the most compelling long-term track records of any asset class, and the structural barriers that once kept it out of reach for individual investors are being rapidly dismantled.
What is private equity?
Private equity involves investing capital directly into private companies (businesses not listed on a public stock exchange). Fund managers acquire these companies, work closely with management to improve operations and drive growth, and ultimately sell them at a profit.
The opportunity here is vast and growing. The number of publicly traded U.S. companies fell from 8,800 in 1997 to 3,952 in 2024, while private firms now account for 87% of all U.S. companies …. meaning most economic growth is occurring outside public markets. Investors who limit themselves to public markets are fishing in an increasingly concentrated pond.
The return advantage
Since 2000, private equity has generated a net annualized time-weighted return of 13%, compared to 8% for public equities, representing 486 basis points of incremental net returns annually. Over the last three decades, this outperformance has held across regions and cycles, delivering approximately 4–5% in annualized excess returns over public equities on a net basis.
The premium is structural, not accidental. Private equity managers engage directly with portfolio companies, execute multi-year value creation plans, and are not distracted by quarterly earnings pressure. A more concentrated investor base creates alignment of interests and a sharper focus on forward performance, something public companies, with their diverse and short-term-oriented shareholder base, cannot replicate.
“In the last decade, the ‘Magnificent 7’ stocks alone accounted for over half of the S&P 500’s gains — private equity offers an escape from that concentration risk.”
– American Investment Council –
A powerful diversifier
Private equity also provides genuine diversification at a time when the traditional 60/40 portfolio is under strain. Correlations between stocks and bonds have risen, diminishing the effectiveness of traditional bonds as a portfolio shock absorber. Many private market assets have historically demonstrated low or even negative correlation to public equities and bonds.
This shows up clearly in downturns. During the Great Financial Crisis, private equity declined roughly 24% — only about half the 47% drop in public equities during the same period. A shallower drawdown and strong long-term recovery is a consistent feature of private equity’s history through market cycles.
The traditional challenge: illiquidity & how we solve it
Private equity has historically come with a significant constraint. Closed-end fund structures typically have a lifespan of 7 –10 years without on-demand liquidity. For most individuals, that lockout period is simply not workable.
Our portfolios include private equity through pooled structures that solve this problem. Investors gain immediate access to a fully deployed portfolio of private equity holdings. Our redemptions are monthly and quarterly, giving you quicker access to your money.
This means no capital calls, no decade-long wait, and meaningful access to your capital while still participating in private equity’s long-term return potential.
The bottom line
The evidence from Bain, KKR, Goldman Sachs, Vanguard, J.P. Morgan, and Cambridge Associates consistently points in the same direction: private equity has outperformed public markets over every meaningful long-term time horizon, provides genuine diversification, and exhibits less volatility through downturns. The traditional barrier, illiquidity, has been meaningfully addressed.
The key lesson for investors is patience. While public markets may outperform in the short term, private equity’s value proposition becomes clear over longer time horizons. If you would like to discuss how private equity fits within your personal financial plan, we welcome that conversation.
This article is for informational purposes only and does not constitute investment advice.
