Private Equity Is Changing—Should It Change Your Portfolio Too?

You’ve built your wealth by making smart, intentional choices — and you’re not swayed by every shiny investment trend. But lately, private equity keeps crossing your radar. Maybe it’s a colleague talking about an evergreen fund, or an article hinting at opportunities beyond the usual stock-and-bond mix.

Once the domain of pension giants and deep-pocketed institutions, the growth of private equity has changed the rules. Lower minimums, new fund structures, and digital platforms are making it possible for individual investors to step into a space once sealed off to all but the insiders.

The question has shifted from “Can I get in?” to “Does private equity belong in my strategy?”

In a shifting market, private equity offers the potential for returns that aren’t chained to public market swings. But it also comes with trade-offs worth weighing carefully. Let’s break down what’s driving private equity growth, where the real opportunities lie, and how to decide if it fits your bigger financial picture.

What Is Private Equity?

Private equity refers to investments in companies that are not publicly traded. These investments are typically made through private equity firms or funds. They are focused on growing businesses, improving operations, or preparing companies for an eventual sale or public offering.

These investments are generally illiquid, longer-term, and complex. Historically, they were only available to institutional investors and ultra-high-net-worth individuals.

Common Types of Private Equity:

• Venture Capital: Investment in early-stage companies with high growth potential.
  
• Growth Equity: Capital for expanding more established businesses.
  
• Leveraged Buyouts (LBOs): Acquiring and restructuring mature companies.
  

Why Is Private Equity Growing So Fast?

The alternative investment industry now exceeds more than $14 trillion – roughly half the size of all U.S. public markets combined. This explosive growth has been driven by several trends that are unlikely to reverse going forward.

Three of these important macro trends are: 

1. Public Markets Are Shrinking

The number of publicly traded companies peaked in the mid-1990s, then declined dramatically. In 1996, there were more than 8,000 publicly traded companies in the U.S. That number had dwindled to less than 5,000 today.

2. IPOs Are Losing Appeal

More companies are sourcing capital from private markets. Companies that once would conduct an initial public offering to finance growth are now selling equity and borrowing directly from private investors. The flexibility and alignment of private investors is a welcome alternative to public sources of capital for many companies.

3. Financial Innovation is Expanding Access

Innovations in fund structures and fintech companies are introducing private investments to new segments of investors. Digital platforms now allow smaller investors to pool resources, while new evergreen fund structures eliminate many of the traditional barriers like long lock-up periods and intricate reporting requirements. 

Evergreen vs. Traditional Private Equity Funds

How you invest in private equity—the fund structure—can dramatically shape your experience. While traditional funds have long dominated, evergreen funds are creating new pathways for individual investors

Today, more investors are gaining access through evergreen funds. These funds offer more flexibility and accessibility, making them an appealing entry point for sophisticated individual investors.

Traditional Structure:

• Limited partnerships with high minimum investments (often $5M+).
• Capital called over time with long lock-up periods.
• Long investment horizons (7–10+ years).
• Intricate K-1 tax reporting that requires detailed partnership accounting and can delay your tax filing.
  

Evergreen Funds:

• Lower investment minimums and accreditation requirements.
• Quarterly liquidity provisions (typically limited to 5%).
• Always available and fully invested upon contribution.
• More streamlined tax reporting via 1099s, similar to what you’d receive from mutual funds or ETFs.
  

What Are the Pros and Cons of Investing in Private Equity?

Private equity can open doors to new opportunities. But like any investment, it comes with trade-offs and things to consider. It’s important to understand the potential risks as well as the benefits. 

Benefits of Private Equity:

• A focus on fundamentals
  Private equity isn’t swayed by headlines or quarterly earnings calls. It’s tied to long-term business performance. That means investments are insulated from market noise and day-to-day swings.
• Low correlation with public markets
  Because these investments aren’t tied to stock tickers, they often move differently from the public market—potentially smoothing returns during volatile periods.
• Opportunities in secondary markets
  The secondary market allows investors to buy into mature private funds, often at a discount and with more transparency than the initial offering. This allows investors to skip the early uncertainty of a new venture.

Disadvantages of Private Equity:

• It’s often more complex
  Private equity strategies can be intricate, speculative, and rely heavily on your due diligence. This isn’t a “set it and forget it” investment opportunity. 
• More limited liquidity
  Private equity often requires locking up capital for years. While evergreen funds offer some periodic liquidity, exits can still be slow (and sometimes costly.)
• Not a level playing field
  The top deals typically go to the biggest players with the deepest networks. Without the right access, you may land in the second or third tier of opportunities, where risk is higher and returns may lag.
• There are no guarantees
  Just like any investment, returns are not guaranteed. Diversification does not guarantee returns or eliminate risk. 

Should Private Equity Be Part of Your Strategy?

Private equity is no longer an invitation-only club. The growth of private markets means this once-niche asset class is now showing up in more high-net-worth portfolios. But having access doesn’t automatically create an advantage.

Finding success in private equity investing takes clarity, discipline, and a deep understanding of how these investments actually work. Here are a few questions we often hear from investors curious about private equity: 

How does private equity make money?
Private equity firms typically invest in companies with the goal of improving operations, accelerating growth, and eventually selling the business or taking it public. That value creation is what drives returns. For investors, it’s about committing to a longer-term trajectory.

How do I start investing in private equity?
It begins with knowing whether you qualify. Many private equity opportunities are limited to accredited investors, which are individuals with either $1 million in net worth (excluding primary residence) or $200,000+ in annual income. From there, it’s about choosing the right fund type (traditional vs. evergreen), assessing your liquidity needs, and aligning the strategy with your broader financial goals. 

Is growth equity the same as private equity?
Growth equity is actually a subset of private equity. While traditional private equity often involves buying out mature companies, growth equity focuses on investing in businesses that are still scaling but already generating revenue. 

We know that private markets can create meaningful opportunities when they’re approached with strategy and intention. Through our Integrated Financial Advantage™ process, we help clients make smart, context-aware decisions about private equity, so it complements your goals rather than complicates them. At SK Wealth, we believe your money should serve your life, not the other way around.