Investors can struggle with investing in private equity. While we like private equity investments for some investors, diversification is crucial. Many private equity investors are very under-diversified, and their portfolios are exposed to huge negative impacts from the failure of most individual deals.
However, there are some quality products that provide proper diversification, deep expertise, and access the many of the best deals. While the management costs of these quality products may seem high, the chances of success are greater and downside risk is greatly diminished. Alternatively, the diversified quality products do not provide the chance for the gigantic home run that may happen from investing in a single deal.
The Private Equity Council has written an excellent paper on the ins and outs of private equity, which is available by clicking here.