For the past two decades or more, private equity has enjoyed a long winning streak — the US Private Equity Index from Cambridge Associates shows that private equity produced average annual returns of 10.48% over the 20- year period ended June 30, 2020. Over the same period, the Russell 2000 Index, a performance tracking metric for small companies, averaged 6.69% per year, while the S&P 500 Index returned 5.91%.
Private equity — a source of investment capital from high net-worth individuals and institutional investors — has historically outperformed public stock markets, many studies show, and this trend is set to continue.
An alternative asset class, private equity is defined as a managed pool of raised or borrowed funds used to obtain an equity ownership position in an entity that is not listed or traded publicly.
