Private Equity’s Diminishing Returns

Investors can’t get enough of private equity. According to research firm Preqin, private equity firms’ assets under management ballooned from $580 billion in 2000 to $2.4 trillion by June 2015 (the latest date for which numbers are available).

Private equity investing has become de rigueur for big money managers ever since The Yale Endowment made piles of money in the funds years ago — making private equity a fixture for money managers trying to emulate Yale’s model.

Current expectations for low returns on U.S. stocks and bonds, at a time when many hedge funds are stumbling, has also left many investors seeking private equity returns to breathe life into their portfolios.

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