Public equity manager challenges the case for private

Loomis Sayles’ Aziz Hamzaogullari has questioned whether asset owners are giving private equity more credit than it is worth, saying that the case for investing in PE rests on flawed return measurement, hidden risks and high fees.

Hamzaogullari, who is founder and chief investment officer of growth equities strategies at the Natixis-owned company, also argued that many investors are allocating to public markets with “less patience” than in private markets and that they should be treated with the same long-term horizon.

Hamzaogullari cited a 2008 study that suggested that institutional clients would terminate mandates with public equities managers based on one to three years of underperformance, despite the fact that, on average, terminated managers tend to beat their replacements over the next three years. But the transition usually comes with an additional 1-2 per cent of cost op top which leaves investors worse off.

“My question is very simple: if you’re investing in public equity with less patience, where people are looking at three-year returns… and you take a much longer time frame with private equity. What’s the difference?” Hamzaogullari told the symposium at Harvard University.

The allocation to private equity has more than tripled among global asset owners and currently stands at about 9.3 per cent of their total assets under management, Hamzaogullari said.

A common argument for that explosion in capital is that there are more opportunities in private equity compared to public, which also is inaccurate, he said. The value of the global public equities market stands at $126.2 trillion, roughly 10 times bigger than the $11.3 trillion global private equity market.

“My argument isn’t that you should not invest in private equity… It’s the endowment factor – you’re feeling that I’m getting something special,” he said.

“I would argue that you should use the same patience with your public money.

“You cannot say I have an endowment or pension that has a 20-year time horizon and evaluate one subset [of investments] with a 10-year view, another subset with a three-year view. It just doesn’t make any sense to me.”

A healthy public market is also critical to the function of private markets, Hamzaogullari said.

In the first quarter of 2026, the number of global IPOs fell by 23 per cent year-on-year which marks the lowest level in six years, according to estimates from EY. The depressed public listing environment has contributed to exit woes across private equity, with the average holding period of private companies increasing from 6.1 years to 6.6 years at the end of 2025, according to McKinsey.

“If you have a bad public market, you’re not going to have a good private market,” Hamzaogullari said.

“When people make the argument that the public market is overvalued, then I would make the argument that there’s no question when things go bad, private equity will take advantage of that, but so does a good public manager.

He cautioned investors against the habit of absorbing poor performance in private equity by simply committing to the next vintage, rather than interrogating the original rationale.

“Why don’t we do this with public? When a manager underperforms, why don’t you invest more?” he said.

“When things are bad with private markets, it’s just a bad vintage… the mentality goes, well, I’ll invest in the next vintage and the next vintage. Eventually I’m going to come out good on this.

‘“You have really good private equity managers that are top decile, and you have very good public managers that are top decile, and unfortunately there are some really bad public and private managers on both sides. [But] the evidence is very clear, the dispersion is much, much more in private equity.”