What Is a Private Equity Fund?
It’s likely that most investors rarely thin about the world of private equity, even though private equity funds control billions of dollars in assets. In the best cases, they reap enormous returns for their investors and help launch some dynamic companies. These funds are not for casual investors, but it can be helpful to learn how they operate and ways you can directly or indirectly invest in them. We’ll cover the private equity fund basics here, but if you have large assets to invest, consider working with a financial advisor who can explain how specific funds work.
What Makes Private Equity Funds Distinctive?
Like hedge funds and mutual funds, private equity funds pool resources from multiple investors to spread risk and increase buying power. It’s what they invest in that sets them apart. Hedge funds and mutual funds may invest in stocks, bonds, money markets and other financial products, and they can generate profit quickly. In contrast, private equity funds’ investments are narrower and longer term. They mostly target companies in a promising startup phase or companies in trouble that need restructuring or new management. These investments often can take years to pay off. 10-year time horizons are not unusual.
0 Comments