Private equity for small millionaires

Private equity is usually only aimed at assets worth millions. Eltif, the new EU legal framework for long-term funds, now also enables access for smaller assets. Is it worth the investment?

Banks and asset managers in Frankfurt hope that the Eltif will make illiquid investments more interesting.

PPrivate equity, i.e. direct participation in companies, has always been an attractive form of investing. If you follow the data service provider Pitchbook, the earnings for the past 18 years have been up to 6 percentage points above those of the broad stock market. But private equity is actually more for institutional or extremely wealthy private investors. The direct investments are in the millions or billions and are accordingly less easy to sell than stocks. So it takes two things: a lot of money and a lot of patience. The minimum investment sums that private equity firms require from fund investors are usually in the millions.

Because private equity should only be an admixture in a portfolio due to its low liquidity, this ultimately makes a high double-digit million dollar fortune a prerequisite. Those with fewer assets usually had to switch to funds of funds. However, these were often so expensive that they robbed the asset class of what makes it so attractive: the high returns. Alternatively, there are also private equity equity funds. It wasn’t a bad choice, but it wasn’t private equity either.