The internet may have driven global connectivity and sped up economic development, but these worldwide links have a downside too. As investors in Kyoto read the same research as those in Manchester, there is a danger that too many roads lead us in the same direction: private equity.

Once a truly ‘private’ asset class with limited general press coverage, private equity has now fully graduated into a mainstream component of investment portfolios. It is important to recognise that private equity today is a fundamentally different asset class and investors and trustees need to adapt their decision-making process accordingly, especially given the significant amounts of capital raised in recent years.

Wheat and chaff

Given the illiquid nature of private equity, it has always taken a discerning eye to identify genuine and sustainable manager skill. However, what had been a relatively opaque asset class is now a well-oiled fundraising system, with several ‘bulge bracket’ platforms now able to raise hundreds of millions (if not billions) of dollars in a short time frame.

Trustees can be presented with many opportunities to assess; below are a few pointers to sort the wheat from the chaff.