Private Equity

Private Equity

What is Private Equity?

While investors gain equity in a business by buying its shares on a stock exchange, they can also gain equity in a private business outside the stock exchange. By investing in private equity, investors can access a wide field of investment opportunities not typically offered in public markets.

Why Private Equity?

  • Diversify portfolio holdings by adding private companies with mature sustainable businesses or newer companies growing quickly
  • Low correlation to publicly traded securities which has the potential to reduce portfolio risk
  • Long-term capital growth

Who Invests in Private Equity?

Institutional investors typically allocate the largest proportion of their investments in private investments to private equity. The Canada Pension Plan (CPP) is one example of a large institutional investor that has a significant allocation to private equity. As of its 2022 Annual Report, the CPP had a 32% allocation to private equity, which was higher than its allocation to public equity.

Where does Private Equity fit?

Private Equity can be a viable complement to traditional stocks and other asset classes in growth-oriented investment portfolios. When used appropriately, private equity can diversify the overall risk-return profile of an investment portfolio. Your Advisor can guide you in deciding the optimal allocation of private equity within your portfolio based on your investment goals, risk tolerance, and objectives.