Why you (too) should invest in private equity and add it to your portfolio: Illustrated in 5 charts

Most investors typically hold a combination of publicly traded stocks and bonds. In order to improve risk-return profiles and enhance diversification, it is essential to explore alternative approaches that go beyond the traditional portfolio allocation. Sophisticated institutional investors have increasingly recognised the critical role private equity plays in their portfolios, leveraging a vast universe of companies to capture substantial long-term value.

Such investors, including sovereign wealth funds like the Government Investment Corporation (GIC) and Temasek Holdings of Singapore, as well as public pension funds like Canadian Plan Investment Board (CPPIB), have been strong advocates of private equity and make part of the largest group of investors in this asset class globally¹.

Despite this institutional success, private equity remains largely inaccessible to most individual investors. Innovation in this space and growing interest are beginning to address this gap, with new evergreen structures improving accessibility, private equity is increasingly recognised as a viable investment opportunity for a larger group of investors.

The pool of private companies continues to expand rapidly, driven by strong entrepreneurial activity and a trend of companies choosing to remain private longer. As a result, private companies now dominate the investment universe, as the average age of firms ahead of going public has seen a significant increase, from 4.5 years in 1999 to over 12 years by 2020². This trend has notably enlarged the pool of investable private companies, with 96% of global firms remaining private today.

Private equity offers investors access to a distinct and complementary set of sector exposures compared to public equities. Whilst public markets tend to be dominated by large, established companies concentrated in sectors like technology, healthcare, and financials, private equity often focuses on different industries and company profiles. For instance, private equity portfolios frequently offer more balanced exposures to sectors such as industrials, business services, and retail, which are less represented in public indices. This complementary sector exposure allows investors to capture a wider spectrum of economic activity and innovation, thereby driving long-term value creation.

Private equity has consistently delivered strong long-term returns across both U.S. and European markets, driven by its active ownership approach, extended investment horizons, and ability to create value through strategic and operational improvements. Investors also benefit from an illiquidity premium, which is the additional compensation for committing capital in the long term and accepting lower liquidity compared to public markets. When thoughtfully integrated into portfolios, private equity can therefore enhance overall returns and diversification, allowing investors to capture both operational value creation and the illiquidity premium while complementing public market investments.

Focusing on buyouts in developed markets, Carmignac Private Evergreen is one of the few pure play private equity, all-in-one solutions, offering you flexibility and control through our evergreen structure. Suited to the needs of individual professional investors, the Fund is well-positioned to offer complementary exposure to a traditional portfolio.

Thanks to being primarily focused on secondaries transactions, we have already achieved diversified exposure to quality private assets, that you have visibility of as of today: