Moondog
Term

Private equity

Also: PE

Investment in companies that are not listed on a public exchange.

Private equity takes stakes in private companies, building value over years before an exit. It can reward patience with an illiquidity premium, within a disciplined commitment plan.

Private equity's appeal is real return for patience, but its averages hide a wide spread: the median fund is unremarkable and most of the reward sits with top managers a family may struggle to access. A disciplined commitment plan across vintages matters more than any single fund choice.

Related terms

Sharpe ratio A measure of the return earned for each unit of risk taken. Strategic Asset Allocation The long-term target mix of asset classes a portfolio is built around. Stress Test Estimating how a portfolio would behave under adverse market scenarios. Suitability The regulatory duty to ensure advice fits the client's circumstances and objectives. Tactical asset allocation Short-term, deliberate tilts away from the strategic allocation to reflect a market view. Time horizon The length of time before invested capital is needed.

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