Aatmaiv team can help you with an overall assessment as to the appropriateness of private equity as a component of your overall asset allocation. Further, we have a variety of tools available to evaluate a large population of existing private equity funds, to help identify funds that may suit your objectives and maximum & effective utilization of their resources by investing it in private equity.
Private equity is an umbrella term for large amounts of money raised directly from accredited individuals and institutions and pooled in a fund that invests in a range of business ventures. The fund is generally set up as a limited partnership, with a private equity firm as the general partner and the investors as limited partners.
The majority of private equity consists of institutional investors and accredited investors who can commit large sums of money for long periods of time. Private equity investments often demand long holding periods to allow for a turnaround of a distressed company or a liquidity event such as an IPO or sale to a public company. Generally a private equity firm will raise pools of capital, or private equity funds that supply the equity contributions for these transactions, characteristically make longer-hold investments in experienced industry sectors or specific investment areas where they have expertise and take benefit on operational roles to manage risks and achieve growth through long term investments.
Private equity is an important asset class to consider in the construction of an individual’s investment portfolio. Theoretically, the low correlation of returns between private equity and more traditional asset classes, such as fixed income and equities, indicates that portfolio risk should decrease by adding private equity investments to a mix of assets.
Additionally, private equity is an attractive investment alternative since it has historically provided returns in excess of major equity benchmarks. Due to the high risk and illiquidity of the private equity asset class, its inclusion in an asset allocation is dependent upon the investor’s investment objective, risk tolerance and time horizon. An individual’s portfolio manager must clearly establish that private equity is a suitable investment and falls within an individual’s investment policy.