Invest in private equity/venture capital for lower volatility risk
Private equity or private capital refers to an equity investment into a private company.
Private equity/venture capital
With this alternative asset class, investment is sourced from neither the publicly listed equity or the debt markets. Unlike stocks and bonds, private companies enjoy a lower risk of market fluctuations, giving investors lower levels of volatility compared to public counterparts, and the benefits of uncorrelated returns due to diversification.
Why invest in private equity?
Capital gained from private individuals and venture capital funds is invested in fast-growth and novel companies and is geared towards their growth, development and operational requirements. Investing in future innovators and industry disruptors is top priority for many investors due to numerous young companies snowballing and disrupting incumbents. When investing in the right company, investors have the opportunity to make large strides should the company go public or a liquidity event like acquisition by another company occurs.