Rethinking Access to Private Equity
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Limited liquidity and complex fund mechanisms have constrained access to private-equity investment for a swathe of investors such as wealth managers and retail investors, prompting demand for complementary solutions that can bring some of the characteristics of private equity into more flexible and liquid forms. This paper introduces the MSCI World Private Equity Return Tracker Index (World PERT Index), which was developed to address this need and provide a bridge between public and private markets.
Key highlights:
- Private equity (PE) has become an increasingly significant component of institutional portfolios as investors pursue returns outside public markets. Access for non-institutional players has been challenging, however, leading to demand for more accessible investment vehicles.
- Part of private equity’s performance relative to public markets arises from sector and regional exposures, as well as the fundamental characteristics of the underlying companies. The World PERT Index has been designed to capture these replicable dimensions using liquid, listed equities.
- Applications of a World PERT Index-tracking fund extend to asset owners, who may use a tracker fund as a holding position for PE allocations and capital calls, and for asset managers, as a liquidity buffer in funds.
Historical performance of the World PERT Index, the PE Fund Index (net of fees), and the World IMI. The World PERT Index and World IMI are indexes of liquid, publicly listed equities, shown as gross total return in USD. The PE Fund Index reflects the net-of-fees aggregate performance of private-equity funds in the MSCI Private Capital Universe and is not investable or directly replicable.
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