Due to the illiquid nature and high risk of the underlying investments relative to public equities, you have the potential to generate high returns not normally attainable from more traditional investing methods when you invest in private equity funds.
Private equity investment performance generally has a low correlation with public equity and fixed-income investments, offering risk and return diversification.
By investing in unlisted companies that are at the beginning of their growth cycle, PE funds allow investors to take part in the growth of a company.
PE fund managers can also dictate terms much more easily and hold management accountable to performance targets and milestones. They can potentially negotiate for seats on the board and typically wield more authority than public company shareholders.
Similar to hedge funds, the profile of a private equity investor is either an institutional investor or someone who is experienced in the financial markets; in other words, an “Accredited Investor”.