Investing in private capital
Private capital may provide investors access to nearly any type of investment opportunity—from significant downside protection to exponential return generation.
Why choose Russell Investments for private capital?
We manage and advise on private capital investments on behalf of clients across the globe. Russell Investments has over 20 years' experience researching managers, both institutionally and individually.
Why invest in private capital?
Investors are challenged to meet the growing demands on their portfolios because of the current interest rate environment and volatile public markets, and we believe long-term investors will benefit from exposure to alpha-generative opportunities. Private capital provides investors:
While select private capital solutions have some correlation to public markets, added diversification benefits include:
- Allocations to strategies often inaccessible via public markets
- Investment in emerging and disruptive technologies
- Exposure to higher levels of potential alpha
Higher return potential
While private markets are perceived to have higher risks than public markets, they can offer potentially higher returns in compensation for their illiquidity. This is driven by:
- Private capital managers' increased industry knowledge, networks, and ability to attract, leverage and deploy senior executives of high quality
- Ability to implement long term corporate strategies without the burden of having to meet short-term earnings obligations
- The use of asymmetric information that doesn't exist in the public sphere, to capitalize on opportunities
While some industry participants lament private capital's inherent illiquidity, this feature also serves as a strength. Longer term investments have historically outperformed the broader public markets.¹ We believe that many of the same characteristics that contributed to private capital's returns in the past, continue to exist and will hold true in the future.
¹Based on a growth of a dollar calculation for 10 and 20 years, using quarterly returns from Thomson Reuters for Private Equity and the following indexes to represent each asset class: S&P 500 Index, Barclays US Aggregate Bond Index, NCREIF Property Index, NCREIF Open-End Diversified Core Index (ODCE), and FTSE/EPRA NAREIT Developed Markets Real Estate Index.
Indexes are unmanaged and cannot be invested in directly.
Past performance is not indicative of future results.
In general, alternative investments involve a high degree of risk, including potential loss of principal; can be highly illiquid and can charge higher fees than other investments. Hedge strategies and private equity investments are not subject to the same regulator requirements as registered investment products. Hedge strategies often engage in leveraging and other speculative investment practices that may increase the risk of investment loss.