Not too long ago, private equity investments were viewed as “exotic” investments. But in recent years, private equity has grown to become a mainstream part of institutional portfolios globally—generally ranging anywhere from 5% to 25% of portfolios’ assets.
Key to this recent growth is the ability of private equity to generate attractive, long-term performance over multiple investment cycles. We believe this performance will continue to appeal to investors for many years to come.
There appears to be plenty of room for growth as well. According to Michael A. Elio, a partner at StepStone, the private market currently represents about $3.6 trillion in investments and is expected to grow by about 9% to approximately $6 trillion to $7 trillion by 2024.
This flood of capital into private equity has some concerned about a potential drag on returns. However, we expect the vast majority of this capital will be generated by “mega” buyout vehicles, typically funded by large institutions and sovereign wealth investors. The smaller, more growth-oriented segment of private equity remains a very attractive space for long-term returns.
For further insight into the private equity market and why investors might consider it, we sat down with Elio, along with Lester Duke, CFA, senior investment analyst for CIBC Atlantic Trust, and Raheel “Raz” Zia, co-founder and partner at Aldrich Capital Partners, for an in-depth roundtable discussion about private market investing as part of the Spring 2017 edition of The Advisor, CIBC Atlantic Trust’s quarterly magazine. Our conversation focused primarily on the following questions:
- Which sectors look most attractive now—and why?
- Are valuations too high to invest? Is the private equity market oversaturated?
- How might impending policy changes affect private market investing?
- Why might investors consider private investments for their portfolio?
To read the full interview—along with the rest of the Spring 2017 edition of The Advisor—click the button below:
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Daniel Criscuolo is a senior investment analyst in CIBC Atlantic Trust's Boston office, with more than 11 years of industry experience. In this role, he serves on the Multi-Manager Investment Team as a private equity analyst.
Private equity is suitable only for qualified investors who are capable of evaluating the risks of such an investment. It often requires a high minimum investment on which an investor does not receive a return until many (typically 10) years later and which the investor may not withdraw in the meantime. Private equity investing also generally carries higher risk than investing in public markets, and carries certain unique risks regarding valuation, pricing, transferability and the possibility of default. Please discuss your individual situation with your investment advisors.