Why Private Equity

Return Potential

Private Equity has Historically Outperformed Public Equities and Bonds over Long-Term Periods

As illustrated in the chart below, private equity has historically delivered a higher rate of return versus traditional asset classes over long time periods.

Private vs. Public Equity: Performance During Market Stress, 2000-2015
Source: Cambridge Associates, US Private Equity Index and Benchmark Statistics (9/30/2016) and Bloomberg Barclays U.S. Aggregate Bond Index.

Market Resilience **

Private equity investments have historically exhibited less downside performance than traditional investments during periods of market stress. As illustrated below, private equity generally outperformed the market even during challenging global economic conditions.

Private vs. Public Equity: Performance During Market Stress, 2000-2016

Private vs. Public Equity: Performance During Market Stress, 2000-2015


Source: Cambridge Associates, US Private Equity Index and Benchmark Statistics (9/30/2016); Standard & Poor’s Capital IQ (www.capitaliq.com). Annual returns are for the years ending September 30.

Allocation to Private Equity

Allocation to Private Equity

Source: Preqin Private Equity Spotlight, January 2015

Portfolio Diversification**

The Historical Risk and Return Profile of a More Diversified Portfolio (10/1/1996 – 9/30/2016)

Private equity investments have historically exhibited less downside performance than traditional investments during periods of market stress. As illustrated below, private equity generally outperformed the market even during challenging global economic conditions.

Portfolio Diversification

 

For illustrative purposes only to show the effect of adding private equity to a traditional investment portfolio. Investment in private equity involves a substantial degree of risk and the appropriateness of private equity for any individual portfolio will vary. For purposes of this illustration, a traditional investment portfolio is one that consists of an investment allocation of 60% assets to public equities and 40% to fixed income investments, including treasuries and government and corporate bonds, and an investment portfolio with private equity consists of an investment allocation of 40% of assets to public equities, 40% to fixed income investments, and 20% to private equity. This illustration does not represent a projection of performance or the historical performance of any particular investment product. The hypothetical historical portfolio returns were created with the benefit of hindsight using the percentage allocations indicated above. Any changes to these allocations will have an impact on the hypothetical historical performance results, which could be material. Hypothetical performance results have many inherent limitations and no representation is being made that any investor will, or is likely to achieve, performance similar to that shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved.

The charts above are for illustrative purposes only. Investment in private equity involves a substantial degree of risk and the appropriateness of private equity for any individual portfolio will vary. Index performance is not representative of the Fund’s performance. There are significant differences between public and private equities, which include but are not limited to, the fact that public equities have a lower barrier to entry than private equities. There is also greater access to information about public companies. Investments in private equities typically have a longer time horizon than investments in public equities before profits, if any, are realized. Additionally, public equities typically provide greater liquidity than private equities, whereas private equities are considered highly illiquid.

The dates used above are based on a common period of data availability. The referenced indices are shown for general market comparisons and are not meant to represent any particular investment. There are significant differences in the risks and potential for volatility of the Fund relative to an index. An investor cannot invest directly in an index. Moreover, indices do not reflect commissions or fees that may be charged to an investment product based on the index, which may materially affect the performance data presented. Past performance is no guarantee of future results.