Based on insights from Bain & Company's Global Private Equity Report
The private equity industry is experiencing a significant shift as it increasingly sets its sights on a relatively untapped market: individual investors. This strategic pivot is driven by compelling numbers that reveal both an opportunity and a necessity.
The Opportunity in Two Numbers: 50% and 16%
Individual investors hold approximately 50% of the estimated $275-295 trillion of global assets under management, yet they represent only 16% of AUM held by alternative investment funds. This disparity represents one of the largest growth opportunities in the investment landscape today.
What's Driving This Trend?
For Private Equity Firms:
- Many of the largest fund managers have set ambitious double-digit growth targets
- Traditional institutional capital sources are projected to grow at only 8% annually over the next decade
- Individual wealth invested in alternatives is expected to grow at 12% annually during the same period
For Individual Investors:
- Private equity has delivered superior returns (14% globally over the past 25 years vs. 7% for the MSCI World Index)
- Traditional diversification has become more challenging with fewer public companies
- The 60/40 stock/bond portfolio model has shown vulnerabilities in recent inflationary environments
Breaking Down the Barriers
While access to alternative investments has historically been limited to the ultra-wealthy, several barriers are now receding:
The industry is addressing key obstacles through:
- Evolving regulations and innovative fund structures
- New distribution channels via wealth advisers and digital platforms
- Emerging liquidity solutions and secondary markets
Platforms like Capital Engine Private Markets are at the forefront of this transformation, facilitating a smoother and more accessible entry into private markets for investors from varied economic backgrounds.
What's Driving This Trend?
For Private Equity Firms:
- Many of the largest fund managers have set ambitious double-digit growth targets
- Traditional institutional capital sources are projected to grow at only 8% annually over the next decade
- Individual wealth invested in alternatives is expected to grow at 12% annually during the same period
For Individual Investors:
- Private equity has delivered superior returns (14% globally over the past 25 years vs. 7% for the MSCI World Index)
- Traditional diversification has become more challenging with fewer public companies
- The 60/40 stock/bond portfolio model has shown vulnerabilities in recent inflationary environments
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