According to a new research report by McKinsey: “private equity’s net asset value has increased more than sevenfold since 2002. That’s twice as fast as public equities over the same period.” As a result, institutions both large and small can longer afford not to have some exposure to private market opportunities.
The enormous growth of private equity has also led to an abundance of new investment vehicles and structures. Secondary funds managed by limited partners (LPs), for example, hit an all-time high of $55 billion in 2018. With better access to liquidity and more secondary trading, long-duration funds have also become more attractive to investors whom might have been hesitant to jump into the private markets. “The rise in secondaries is not just about returns,” the report states. “These funds are injecting liquidity and creativity into the marketplace.”
All of this has helped broaden access to the private markets like never before.