New avenues for wealth investors to access the private equity opportunity
Individual investors have historically lagged institutional allocations to private equity. But innovation in fund structures, including the evolution of the European Long-Term Investment Fund regime in Europe, is now enabling broader access.
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Private markets, and private equity in particular, have become a key investment option for institutional investors over the past 30 years. Schroders Capital research and industry consensus suggest that between 10–20% of institutional portfolios are now committed to private markets, with private equity the largest and most established asset class allocation.
In contrast, allocations among wealth portfolios have remained far lower: typically under 10%, and often less than 5%. But there are signs that this is beginning to change.
A key driver of this shift is product innovation. Regulatory developments in recent years have allowed for the creation of new fund structures that remove some of the long-standing barriers to entry to investing in private markets, including crucially related to liquidity. These new product types are broadening access to private equity and allowing a wider range of investors to participate in this dynamic asset class.
This article explores why private equity is attracting greater interest, what has traditionally held wealth investors back, and how new fund options are helping close the gap, with a focus on the updated European Long-Term Investment Fund (ELTIF) regime in Europe.
Q: Why should investors consider allocating to private equity?
Private equity has historically been a source of strong return potential – in both benign and challenging market environments.
Over the long term, average private equity returns have generally outpaced public markets. That dynamic has come under more pressure in recent times, as listed equities have enjoyed a long bull run driven by small segments of the US market. However, as we enter a more volatile part of the cycle, private equity’s long-run track record – especially during challenging market conditions – is key.
Our research into performance trends of the past 25 years, taking in five major market crises (the dotcom crash, Global Financial Crisis, Eurozone debt crisis, Covid outbreak and the return of inflation in 2022) shows private equity generally outperformed public markets. Moreover, that outperformance was twice as high in down markets, with significantly smaller drawdowns.
Private equity has delivered twice the outperformance during crises
Past performance is not a guide to future performance. Source: MSCI (Burgiss), Schroders Capital, 2024. 1MSCI’s Burgiss Global Private Equity Funds Index is a capitalisation-weighted index consisting of Buyout, Venture Capital, and Growth funds. The performance figures are based on pooled quarterly time-weighted returns in $, net of all fees to Limited Partners. Note: Simulated performance without crises assumes periods with market disruptions are excluded. The CAGR is calculated over a shorter effective period to reflect the removal of these periods
This outperformance reflects how assets are held and valued. Private equity managers are able to time exits and focus on long-term value creation strategies, with ongoing valuations reflecting fundamental business drivers, not short-term sentiment.
Private equity also offers access to a broader opportunity set. With public markets shrinking over recent decades, more than 85% of companies in the US with revenues over $100m are now privately owned. That opens a vast investable universe that’s increasingly difficult to reach through listed markets alone.
Moreover, in the current environment private equity offers diversification by tilting more toward service-oriented and domestic companies, which can be less exposed to global trade tensions and tariffs.
These factors are being recognised by investors. Schroders’ Global Investor Insights Survey showed private equity was the second most favoured asset class for return opportunities across all investor types, including wealth managers and gatekeepers.
Private equity has higher exposure to services and domestic revenues
Past performance is not a guide to future performance and may not be repeated. Source: Pitchbook data as of 27 May 2025, MSCI data as of 10 June 2025, S&P Capital IQ data as of 21 May 2025, Schroders Capital, 2025. For Private Equity, the percentage of services and goods is based on capital invested in buyout investments LTM April 2025. 41 sectors have been split into goods and services. For MSCI Global, the percentage of services and goods is based on the adjusted market cap USD. 151 sectors have been split into goods and services. Real estate was excluded. Domestic share is defined as revenues generated in the company’s segment 1 region. The views shared are those of Schroders Capital and may not be verified. Forecasts and estimates may not be realised.
Q: Why have individuals historically been less likely to allocate?
The historical underrepresentation of private equity in wealth portfolios largely comes down to structural barriers, such as liquidity, minimum investment thresholds, and complexity.
Traditional private equity funds typically run for 10 years or more, during which capital is locked up. Liquidity is only available through distributions from underlying investments, which often begin several years into the fund’s lifecycle. Minimum investments are also high – often in the millions – and the due diligence required can be complex.
New fund structures are, though, addressing many of these traditional constraints. So-called ‘semi-liquid’ vehicles – such as the UK’s Long-Term Asset Fund (LTAF), interval and tender offer funds in the US, and ELTIFs in Europe – are designed to open access to private equity, and private markets more widely, to a broader investor base.
These structures have much lower investment minimums. Their structure also means investors can buy in at regular intervals (monthly or quarterly) and are typically buying into existing portfolios, providing immediate exposure rather than staged capital commitments. They also incorporate controlled, periodic liquidity mechanisms (typically quarterly).
While they remain long-term investments, these structures offer greater accessibility and usability for individual investors. Importantly, they generally come with simplified investment processes, and provide investors with enhanced reporting, including monthly valuations and quarterly reports in line with global accounting standards.
Q: Why choose an ELTIF for private equity access?
The ELTIF regime, following its significant update in late 2024, offers a compelling route into private equity. Among the key changes under ELTIF 2.0 are:
- Regulatory-defined minimum investment amounts were removed, although most funds will still apply a minimum threshold that is accessible for target wealth investors.
- Investor onboarding processes were simplified, with suitability now assessed under MiFID rules and ELTIF-specific constraints removed.
- Structuring flexibility was enhanced, including explicit support for master-feeder fund structures that allow individual investors to access institutional private equity funds.
- Liquidity management frameworks were introduced, typically enabling quarterly redemptions within set limits to protect remaining investors and maintain the long-term profile of the fund.
These changes make the ELTIF a much more practical and relevant vehicle for individual investors seeking exposure to private equity. You can learn more about the new regime here.
Q: What about investors who want sustainability-aligned investments?
The ELTIF regime aligns with the EU’s Sustainable Finance Disclosure Regulation (SFDR), enabling funds to be classified as Article 8 ("light green") or Article 9 ("dark green"). Many private equity funds meet these criteria.
For Article 8 funds, this often involves restrictions on certain sectors, typically reflecting the manager’s conviction-led investment philosophy, and clear reporting against defined sustainability metrics.
More broadly, many private equity managers, including Schroders Capital, embed Environmental, Social and Governance (ESG) considerations across their investment process. These are assessed during initial due diligence for all prospective investments and monitored throughout the life of the investment.
Conclusion: A new avenue to access growth opportunities
Institutional investors have long used private equity as a strategic allocation. For those individual investors and wealth managers who want to access the opportunities across this broad and dynamic asset class, there are now a range of options to enable them to do so and that address historic barriers to entry.
Of course, there remain risks associated with private equity investing and the nature of the liquidity through these investment options means it should remain a long-term allocation. On the other hand, the asset class does open the door to potential growth opportunities that are otherwise inaccessible on public markets – and it has historically performed well even during difficult economic cycles.
The ELTIF regime is relevant in this context for investors in Europe, with changes introduced over the past year making it more accessible and broadening both the range of potential investors and the range of investment options that can be accessed.
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