“Smart money” is doubling down on private equity – but are private investors missing out?
Public pension plans, sovereign wealth funds and family offices keep bulking up their investments in private equity and private markets. Now, at last, private investors can get in.
In July, the largest US public pension fund CalPERS (California Public Employees’ Retirement System) announced its best set of results in four years. It also bulked up its investments in private equity – companies not listed on a public stock exchange – upping the allocation to nearly 18% of its mammoth $556.2 billion portfolio.
Meanwhile, the $273 billion New York State Common Retirement Fund committed $2.3 billion to the asset class in March and May alone.
These are not isolated examples: “smart money” keeps investing more in private equity and private markets funds.
In a nutshell, these are investment funds run by private equity firms that buy large companies not listed on a stock exchange to grow the business – through strategic growth, by introducing operational efficiencies, or better management, etc. – and eventually sell it at a profit.
Public pension plans – as well as sovereign wealth funds – have increased their allocation to private equity by an average of 10% a year in the past decade. Meanwhile, two-thirds of family offices with assets of more than $1 billion expect to bolster exposure over the next year.
Why? As CalPERS’s CEO put it, “we think [private equity] will outperform the public markets over the long term, and why shouldn’t our members have access to those outsized returns?”
A long track record of “outsized returns”
Over the long term, private equity has consistently outperformed its public market equivalents, although this is not a guide to the future. In the 25 years from 1999 to 2024, annualised returns on private equity funds surpassed global listed equity funds by 6.2% a year. That’s a difference of roughly an additional £100k return on an illustrative £10k investment.
That’s great news if you are a US public sector retiree and your pension fund invests in private equity. But what if you are a private investor in the UK instead?
Private investors confined to watch from the sidelines
Historically, access to private equity funds has been severely restricted due to high investment minimums (typically millions of US dollars), complex regulatory frameworks, and a requirement to lock up capital for 10 years or more.
Unsurprisingly, the only investors able to satisfy those stringent prerequisites – and reap the associated rewards – were institutional investors, like the pension funds mentioned, but also endowments, sovereign wealth funds, large financial corporations as well as ultra-high net worth investors.
Individual investors have been confined to watch from the sidelines. But this is finally changing.
Barriers finally coming down for individual investors
A major catalyst for change is the emergence of semi-liquid or evergreen private markets funds. These are private markets investment vehicles structured similarly to unit trusts with a few more restrictions. Capital can be invested at regular intervals and there are periodic liquidity windows (usually once a quarter), compared to a 10-year capital lock-up typical for traditional private markets funds, though a long-term horizon is still encouraged.
Minimum investment thresholds can be as low as £10,000, compared to $5-$10 million for traditional private markets funds.
Many of the world’s leading private equity and alternative investment managers are creating evergreen versions of their flagship funds for private investors.
EQT, Europe’s largest private equity firm, has developed the Nexus platform designed specifically for this segment. Brookfield and Oaktree, leaders in alternative assets and private credit, have joined forces to create Brookfield Oaktree Wealth Solutions, which aims to deliver institutional-quality investment opportunities to private investors. Leading secondaries investor Lexington Partners, part of Franklin Templeton, is also opening up its offering.
Private investors are increasingly embracing these innovative structures, which have become one of the fastest-growing segments of the asset management industry.
The number of evergreen semi-liquid funds has doubled every five years over the past 15 years, reaching 726 funds in June 2025, with assets worth $419 billion up from $350 billion at the end of 2023.
Can the good times continue?
The investment case for an allocation to private equity is hard to ignore. There are whole swathes of the economy that simply cannot be accessed through public market investment today.
Of the 159,000 companies generating $100 million or more in annual revenue, around 140,000, or 88%, are privately owned. It is a vast opportunity set, which dwarfs public listed markets.
Moreover, the gap is widening. In the last decade 1,013 European-listed companies have been acquired by private equity or unlisted companies, stripping more than $1 trillion from European equity markets.
Increasingly, some of the best growth stories are happening off-exchange. The opportunity may well be just too big to ignore. Investors limiting their choice to equities and bonds risk missing out. Even governments around the world recognise this: they are advocating – and indeed legislating – for greater exposure to private equity and private markets.
What was once the domain of institutional giants is opening up to individuals looking to diversify their portfolios beyond equities and bonds.
With new fund structures, lower entry points, and a plethora of credible funds available, the door to private equity and other private assets is no longer sealed shut.
Want to learn more? Free guide to investing in Private Equity
If you are an experienced investor curious about Private Equity and how you might now be able to access this asset class, Wealth Club has produced a comprehensive free guide: “Investing in Private Equity and Private Markets”.
This guide explains what Private Markets and Private Equity are, how they work, the potential benefits and, importantly, the risks involved. It also details how eligible investors could potentially invest from just £10,000.
Request your free guide at www.wealthclub.co.uk/city-am
Private Markets investments are high risk and illiquid. You could lose your capital. Only High Net Worth Individuals or Sophisticated Investors are eligible to invest. Promotion issued by Wealth Club Ltd, a non-advisory service.
