Opportunities & Advantages of Private Equity Investments
Private equity has historically offered the potential for attractive long-term returns and diversification benefits relative to traditional public market investments, although outcomes vary and these investments involve additional risks. These higher returns stem largely from investing in the vast and growing marketplace of privately held companies not accessible via traditional investor products, as well as their ability to create value by proactively influencing portfolio companies’ management and operations.
Investors can access Private Equity by investing directly in a deal, investing in a Private Equity fund that handles multiple deals, or through a ‘fund of funds,’ which invests in several Private Equity funds. Private Equity can refer to a wide variety of investment styles and even non-equity securities.
Our structure allows us to opportunistically capitalize on various investment classes such as:
- Late-Stage Private Equity / Leveraged Buyouts (LBO’s)
- Growth Capital
- Venture Capital (Angel Investors or Seed Investors)
- Mezzanine Financing
- Distressed Investing
The Role of Private Markets
Private market investments—including private equity, private credit, real assets, and certain hedge fund strategies—can play an important role in a well-diversified portfolio for eligible investors. These investments provide exposure to companies and opportunities that are often unavailable in the public markets and may offer differentiated sources of return and diversification.
Historically, many institutional investors—including endowments, foundations, and pension plans—have allocated meaningful portions of their portfolios to private markets as part of a long-term investment strategy. Over longer measurement periods, broad private equity benchmarks have generally produced returns that compare favorably with public equity markets, although results have varied significantly across market cycles, investment managers, and individual funds. More recent periods have also demonstrated that public markets may outperform private markets over shorter time horizons.
Beyond return potential, certain alternative investments may provide portfolio diversification because their return drivers often differ from those of traditional stocks and bonds. However, these investments involve meaningful risks, including illiquidity, limited transparency, leverage, valuation uncertainty, and the potential loss of principal. As with any investment, manager selection and disciplined due diligence are critical to long-term outcomes.
Read More: Source: Cambridge Associates, US Private Equity Benchmark Commentary – Calendar Year 2024 (2025) and Have Public Market Returns Permanently Eclipsed Private Market Returns? (2024).
Private Equity as a Diversifying Asset Class
Private Equity can serve as a valuable way to diversify a portfolio when paired with more traditional assets. Historically, it has been less correlated to the swings of public markets, offering a combination of higher returns and lower risk (see Table 1). While this relationship broke down slightly during the financial crisis (when almost all asset classes were negatively affected), we expect that Private Equity will continue to be an important tool for diversification and a source of strong returns over the long term.
The Opportunity
Small-cap Private Equity offers unique opportunities, as deals under $50 million represent only a small fraction of total deal activity, implying less competition and the potential for higher returns.
One advantage of smaller deals is that they don’t rely heavily on cheap debt financing like larger deals do. While using less debt might typically mean lower returns (with less risk), smaller deals offset this with better deal dynamics (less competitive bidding) and more opportunities to improve the operations of smaller portfolio companies.