The S&P Listed Private Equity Index follows the performance of the leading publicly listed private equity companies that meet specific size, liquidity, exposure, and activity requirements.
- What is private equity, and what is driving interest in private equity?
Private equity investments are made in operating companies that are not publicly listed or traded on a stock exchange. Such firms are known for their extensive use of debt financing to purchase companies, which they restructure and attempt to resell for a higher value.
The primary reason for investor interest in private equity is its return enhancement potential. In the 1980s, 1990s, and 2000s, each U.S. dollar invested in the average private equity fund returned at least 20% more than a U.S. dollar invested in the S&P 500®, with outperformance of at least 3% per year. [1]
Currently an important asset class for institutions globally, private equity investment has grown significantly over the past two decades in response to low central bank rates, low discount rates and higher liabilities, and lower expected returns in public markets. [2]
- What are the different approaches used to access private equity?
Commitments to closed-end limited partnership structures have been the most common route to access private equity investments for qualified institutions and high-net-worth individuals. New options are emerging, including direct investment, co-investment, separate accounts, and listed private equity (LPE).
