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Private equity is one of the main ways investors gain exposure to privately held companies. It has historically delivered better long-term risk-adjusted returns than public equity1, achieving this primarily by making operational improvements across portfolio companies, with the aim of growing revenues and expanding margins.
The path to growth within private equity is primarily driven by three factors:
An Expanded Opportunity Set – A wider set of investible companies than is available in public markets.
A More Efficient Equity Exposure – Returns driven by company-level fundamentals, proprietary informational advantages and control of value creation.
A Long-Term Growth Perspective – Private equity is designed to capitalize on long-term changes to strategies, operations, capital allocations and management.
1Source: Pitchbook Capital Indexes Dataset as of December 31, 2025. Public Equity is represented by the MSCI ACWI Index. All returns are net of fees.
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RISK CONSIDERATIONS
Alternative investments are intended for qualified investors only. Alternative investments, including private equity funds, provide limited liquidity and include, among other things, the risks inherent in investing in securities and using leverage. An investment in an alternative investment fund can be speculative and should not constitute a complete investment program.
Private equity funds will typically invest in securities, instruments and assets that are not, and are not expected to become, publicly traded and therefore may require a substantial length of time to realize a return or fully liquidate. There can be no assurance that any such fund will be able to identify, choose, make or realize investments of the type targeted for their fund, or that such fund will be able to invest fully its committed capital. There can be no assurance that a fund will be able to generate returns for its investors or that returns will be commensurate with the risks of the investments within such fund’s investment objectives. The business of identifying and structuring investments of the types contemplated by these funds is competitive and involves a high degree of uncertainty. In addition to competition from other investors, the availability of investment opportunities generally will be subject to market conditions as well as, in many cases, the prevailing regulatory or political climate.
IMPORTANT INFORMATION
The views and opinions are those of the author as of the date of publication and are subject to change at any time due to market or economic conditions and may not necessarily come to pass. The views expressed do not reflect the opinions of all investment personnel at Morgan Stanley Investment Management (MSIM) and its subsidiaries and affiliates (collectively the Firm”), and may not be reflected in all the strategies and products that the Firm offers.
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