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Which Private Equity Fund Types Are Preferred by Wealth Managers?

by Claire McNeil

  • 12 Dec 2012
  • PE

A number of wealth managers invest in alternative assets, such as private equity, as part of their investment portfolio, particularly given the possibility of above average returns in compensation for a greater level of risk relative to more traditional investments. Data from Preqin’s database reveals that private equity is an alternative investment utilized widely by the wealth management industry.

The most utilized private equity fund type for wealth managers is venture capital, with 47% of wealth managers either investing or considering investing  in this fund type; a close second is buyout, which 44% of wealth managers having a preference for this fund type. Wealth managers’ preferences show that they are willing to invest in both early and late stage private equity; 37% of wealth managers invest or consider investing in early stage investments, and 34% have a preference for growth and expansion/late stage.

Wealth managers are less active in direct secondaries, co-investment, natural resources, venture debt, secondaries and turnaround, with these fund types together preferred by less than 5% of wealth manager investors on Preqin’s database. A slightly larger proportion of wealth managers commit or will consider committing to fund of funds and mezzanine, with these fund types each favoured by 13% of wealth managers. Special situation and distressed debt follow closely, with 7% and 11% of investors investing or considering investing in these fund types respectively.

More information on private wealth investors and their investment activities in the private equity asset class can be found on Preqin’s Investor Intelligence database, including information on other private investors such as wealth managers and single and multi-family offices.

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