The use of private capital in investor portfolios has grown tremendously over the last 20 years, aided by the public success of U.S. endowments like Yale and Harvard, who were early adopters of venture capital and private equity. In this paper, we review aspects of private capital’s history, its long-term growth prospects, and why an increasing number and range of investors are utilising the private markets globally.
We consider the size of the investable universe and what proportion of it consists of private and public assets. We then outline the incredible diversity offered to private market investors and cover some portfolio construction theory to explain why investors are deciding to invest privately. Return enhancement, lower risk, increased transparency, and some truly differentiating features versus public markets are some of the benefits considered in this paper.
