Introduction to Private Equity
Private equity funds pool the resources of institutional and retail investors to invest in companies that are not yet listed on public markets. They will provide seed or development funding for new and growing businesses. That capital may then be used to fund acquisitions, develop new products or build new infrastructure. Investing at this early stage in a company's development can bring significant returns, but may also bring significant risks.
In return for their investment, investors will receive a share of the profits and will own a portion of the company. When that company is sold, or floated on the stock exchange, investors will also receive a portion of the proceeds.
Private equity funds will aim to mitigate risk by having a series of different investments, though many specialise in particular areas such as technology. Private equity investments are high risk and illiquid. As such, the majority of private equity funds are structured as closed-end investment companies and investment trusts. They will also tend to suffer in a difficult economic climate, when smaller companies tend to go bust. However, they can add both racier returns and diversification to a portfolio.
The tax treatment of investments is subject to tax law and HMRC practice which are subject to change.
|Name||6 Months (%)||1 Year (%)||3 Years (%)||5 Years (%)||Currency||Sector|
|Xtrackers LPX Private Equity Swap UCITS ETF 1C GBP||-4.46||3.81||37.10||74.26||GBP||Equity - Other Specialist||Buy|
|iShares Listed Private Equity UCITS ETF GBP||-5.74||0.11||35.03||69.03||GBP||Equity - Other Specialist||Buy|
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