Private equity: opportunities and risks explained

Where opportunities may arise

Investors may gain exposure to businesses and strategies that are not available through public stock markets. Active ownership may support operational changes and growth.

Potential returns are uncertain and depend on the company, entry valuation, financing, market conditions and execution. Past performance is not a reliable forecast.

Key risks to understand

Private investments are often illiquid. Investors may not be able to sell when they need cash, and reported valuations may be updated less frequently than listed-market prices.

Leverage, concentration, operating setbacks and economic downturns can amplify losses. In some structures, investors may lose their entire investment.

Costs and transparency matter

Management fees, performance-based compensation and other expenses reduce net returns. Understand how fees are calculated and what information investors will receive.