Is PE a superior form of ownership?

One response to “Is PE a superior form of ownership?”

1. 

   davidmbrown1@hotmail.com

   August 13, 2019

   The article highlights the wide variety of possible approaches within PE – So it is clearly not one homogeneous set of tactics and, as such, it is therefore difficult to gauge if PE is a “superior” or “inferior” form of ownership – simply because there is no “one” version of what we call PE. So, unless you want to analyse each declension of an array of PE strategies against listed (for being better or worse), perhaps a better question is – Does PE offer a wider variety of tools to achieve results than is possible from listed companies…? the answer to that is clearly yes – and therein lies its attraction. PE allows investors greater degrees of freedom to benefit from information asymmetries and undertake radical change within companies. The returns are therefore a risky set of change alphas that are unobtainable on the listed market. To the extent that these alphas are uncorrelated with the listed market, they act to benefit the diversification of total portfolios. this has been the experience of the majority of institutional investors who have been able to competently access this complicated space. The better the PE, the less correlated with listed, and the more virtuous it has been to include in the institution’s policy.

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