Investing in private equity funds

nick1234

Hi
just seeking some advice as i am looking to diversify my portfolio which is currently made up for index trackers and etfs, heavily weighted to emerging markets
i am looking to buy 3i or Harbourinvest and have read the factsheets, but when i look at performance cant help but think i would only be buying these for the sake of investing in something different, the after fees putting the extra funds into a tracker would be better off? 

Has anyone bought these 2, 3i has performed much better than Harbourinvest, does anyone have a preference or alternatives?  I have a high tolerance for risk and long time frame.  

Thanks

JohnWinder

I wonder if you could specify any risk(s) you see with your current investment choices which should be reduced by diversifying into PE? That, of course, is my assumption that one would diversify to reduce risk. If you have another reason to diversify, such as PE has better returns (not wishing to put words into your mouth), could you tell us your reason(s)?

tacpot12

I agree with your analysis that once charges are taken in account there is little performance reason to take the risk of investing in private equity. I looked at the Pantheon IT before deciding that just wasn't necessary in my retirement portfolio. The portfolio has c£500K invested and I have quite a high risk tolerance. 

george4064

I added BMO Private Equity Trust (BPET) to my ISA last year, albeit only a small 5% allocation. The ongoing fees are about 1.2% and with performance fees included it’s comes to about 2% per annum charges. Performance has been so-so, but I will give it a bit more time before I make any changes.

jimjames

tacpot12 said:

I agree with your analysis that once charges are taken in account there is little performance reason to take the risk of investing in private equity. I looked at the Pantheon IT before deciding that just wasn't necessary in my retirement portfolio. The portfolio has c£500K invested and I have quite a high risk tolerance. 

I have PIN in my portfolio and previously Graphite PE. Long term performance has been good and I just wanted some diversification too.

Thrugelmir

PE provides diversification for a portfolio. With the number of listed companies decreasing significantly over the past 20 years. Avoids the very real danger of concentration risk  which is currently the case with some tracker funds. As for fees. Investing in unlisted companies isn't a robo invest exercise. Not every investment can be based on cost of fees alone. PE funds shouldn't be measured in short term performance alone. 

Voyager2002

A number of Investment Trusts include an element of private equity without the fees that a dedicated PE investment can command. Two examples that I hold are the former Woodford Patient Capital (at a pretty spectacular discount) now run by Schroder's and the Vina Capital Vietnam Opportunities: I am sure there are many more.

Thrugelmir

F&C have held around15% of their portfolio in unquoted stocks for decades. SMT holds unquoted stocks. 

Moe_The_Bartender

I used to hold HVPE and it did well for me but sold out and reinvested in Chrysalis (CHRY). Chrysalis runs a concentrated portfolio of a small number of business that I like (TransferWise, Graphcore, Starling Bank, for example). I like its transparency which is something that cannot be said about other PE funds.

Thrugelmir

Moe_The_Bartender said:

I used to hold HVPE and it did well for me but sold out and reinvested in Chrysalis (CHRY). Chrysalis runs a concentrated portfolio of a small number of business that I like (TransferWise, Graphcore, Starling Bank, for example). I like its transparency which is something that cannot be said about other PE funds.

Managers generally do provide a commentary on their investment choices. Up to the individual as always to do their own research and look under the bonnet to ascertain whether an investment company meets their own objectives. 

Prism

I picked up Chrysalis at a low last March and have been happy with the performance of the underlying investments, especially the THG IPO, Klarna and Transferwise 
I have also picked up a small holding in the Baillie Gifford PE trust for its access to SpaceX, Bytedance and Stripe.