The Value of Private Equity for Institutional Investors

Abstract

Private equity investments are complex. They should only be considered when there is
sufficient knowledge of this asset class. We are of the opinion that the added value of
private equity for an investment portfolio must come from a higher expected return
than public equities or a desire to access to specific sub-markets. The higher expected return would have to serve as compensation for the lack of liquidity and transparency. If assets are allocated to private equity, good manager selection capabilities
are a necessary prerequisite.