For many investors, the public market represents the entirety of their equity exposure. But here’s the reality: over 85% of sizable U.S. companies are privately owned. That means most portfolios are built on only a small slice of the opportunity set.
Private equity provides investors with access to opportunities that may offer high-growth potential, strong risk-adjusted returns, and reduced correlation with public markets. With today’s evolving investment environment, it may be time to consider whether this powerful asset class belongs in your portfolio.
Source: Capital IQ, November 2023
What Is Private Equity?
Private equity involves investing in private companies—those not listed on stock exchanges. Private equity is one of the illiquid Alternative Investments, financial assets that are not typically traded publicly and do not fit into traditional investment asset classes (e.g., stocks, bonds, or cash), offered by Mission Wealth.
When you invest with private equity, you gain an ownership stake in businesses that may be early-stage, growth-focused, or undergoing transformation. While these investments are less liquid, they offer differentiated exposure that may complement public equities.
In the United States, over 85% of substantial-sized companies are private, yet most investors hold 100% of their equity in public markets.”
Why Consider Private Equity Now?
We believe we are entering a new investment regime—one shaped by higher interest rates and moderating returns in public stocks. In this landscape, private equity presents several key advantages:
- Higher Return Potential
Private equity has historically outperformed public equities on an annualized basis, while exhibiting lower volatility over full market cycles.
- Downside Protection
During major market drawdowns, private equity has captured only 40%–60% of the downside but 100%–115% of the recovery, offering a smoother ride when markets get bumpy.
- Broader Opportunity Set
From tech and healthcare opportunities to niche manufacturing and industrials, private equity unlocks access to a wider array of private growth engines not available on public exchanges.
Breaking Down the Barriers
From tech and healthcare opportunities to niche manufacturing and industrials, private equity offers access to a wider array of private growth engines not available on public exchanges.
- Large minimum investments, oftentimes of $5M or more
- Capital calls over several years
- Relatively concentrated portfolios
Mission Wealth removes these roadblocks by extending our partnerships with institutional-quality funds with diversified portfolios across sectors, geographies, and strategies.
Is Private Equity Right for You?
Private equity investments are less liquid than public markets. As such, they are best suited for long-term, buy-and-hold investors who don’t need immediate access to their capital. If you’re seeking:
- Enhanced return potential
- Diversification beyond public markets
- Exposure to high-growth companies
…then private equity may be worth exploring.
Additionally, private equity funds may carry higher fees and investment minimums than daily-liquid investments. As with any investment, it’s important to weigh the potential risks and rewards before making a decision.
Take the Next Step
Interested in whether private equity fits into your broader financial plan? Explore Mission Wealth’s Alternative Investments solutions and schedule a complimentary portfolio review today.
Mission Wealth is a Registered Investment Adviser. This commentary reflects the personal opinions, viewpoints, and analyses of the Mission Wealth employees providing such comments. It should not be regarded as a description of advisory services provided by Mission Wealth or performance returns of any Mission Wealth client. The views reflected in the commentary are subject to change at any time without notice. Nothing in this commentary constitutes investment advice, performance data, or any recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Mission Wealth manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.
MISSION WEALTH IS A REGISTERED INVESTMENT ADVISOR. ALL INFORMATION HEREIN HAS BEEN PREPARED SOLELY FOR INFORMATIONAL PURPOSES. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RETURNS. INVESTING INVOLVES RISK AND POSSIBLE LOSS OF PRINCIPAL CAPITAL. 00765982 06/25
