Rohit Singh London in Leadership, Digital Marketing, Technology Director - Head of Innovation & Digital Disruption • KPMG Dec 6, 2019 · 1 min read · +200

Why Hedge Funds are Losing Money to Private Equity

Why Hedge Funds are Losing Money to Private Equity

Hedge funds are leaders in the financial market. Their market-wide hold on global finances is loosening, however. A shift of billions of dollars just took a chunk from public funding and put it in the private sector. There’s a reason for this shift and clear ways of getting involved as an investor.

The trend doesn’t entirely hurt the hedge funds, but the spur in private equity does present new opportunities.

What is Private Equity?

The funding of a project, as achieved through the form of an investment, is called private equity when the investment isn’t listed as a public asset. Some of the largest conglomerates buy and sell companies that have tremendous influences but aren’t recognized by the public. From deep-sea drilling to NASA cleaning equipment, there’s a lucrative world of private companies to invest in. Being private, regarding the law, means that an asset can’t be sold as a stock.

Why Are Hedge Funds Losing Money to Private Equity?

The market shift taking place is the result of two industry changes. The first is the access to entrepreneurship that millions of more people have. The second force behind this trend are the new ideas that global investors need. The technological changes of our planet call for new, adaptable solutions to arise. Finding those solutions will call on the bright ideas of a global investment market. None of these thinkers are found on a stock exchange.

Here are more reasons why private equity is rising up:

  • A Different Market for Starters

The promises of private equity are established on the terms of diversification. A diverse portfolio protects an investment by putting it into different groups. A portfolio is safer when its money is spread out over multiple assets.

  • Profiting at 25 Percent

Market data shows private equity as having returns of up to 25 percent. The category of investments in private equity are both short and long term contracts.

  • Alternative Credit

The credit granted through private equity is another growth factor regarding market participants.

What Does Private Equity Invest In?

The core asset types in private equity come from the buy, sell and exchange of companies. There are three primary ways that funding is achieved, regardless of which type of outreach is used. Private equity purchases its assets through:

  •  Acquisitions
  • Buyouts
  • Delistings

To learn more about both private equity and hedge funds, continue to visit

Victor Alston Dec 9, 2019 · #2

Great info, thanks for sharing.

Joseph Sprute Dec 6, 2019 · #1

hedge funds bet on first movers. private equity invests in known relations to goods & services. first movers are cyclic, private equity is long-term investing