David Brenchley, The Times, July 22 2023:
Cheap private equity investment trusts can be lucrative pension investments – but you need to pick the best and back them for the long-term.
Private equity funds have been in the spotlight since the chancellor, Jeremy Hunt, got nine of Britain’s biggest pension firms to agree to pump more of their investors’ cash into early-stage, unlisted British businesses…
“Venture and growth capital is different to traditional private equity,” Mick Gilligan from the wealth manager Killik said. “Anyone investing in venture or growth capital should take a very long-term view and so these are ideal investments for pension funds.”
Private equity investment has mainly been done by institutional investors such as big US pension funds or sovereign wealth funds. The best way for ordinary investors to invest is through investment trusts…
Today, only one trust in the private equity sector is on a premium, three are on single-digit discounts and the rest are on double-digit discounts…
“I see no reason why investors shouldn’t continue to make decent long term returns from private equity,” James Carthew from the research firm QuotedData said. “The extraordinarily wide discounts they are on represent a particularly attractive opportunity.”..
Don’t just focus on the UK – as with investing in listed companies, a lot of the best opportunities may come from America or Europe. “Diversifying is usually a good idea whatever you are investing in,” Carthew said.
He likes so-called fund-of-fund private equity trusts such as HarbourVest Global Private Equity, Pantheon International and abrdn Private Equity Opportunities. These trusts invest mainly in other private equity funds, giving a diversified portfolio in some cases of thousands of stocks. They also invest in private companies directly if they see a good opportunity. Another global trust is Oakley Capital, which invests in technology, consumer, and education companies such as the German university group IU and the Iberian property firm idealista.
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