Demand for private equity strong, but size may work against returns

APPETITE for private equity is at an all-time high, and that should not be a surprise. Interest rates remain low and, depending on whom one consults, long-term future returns from traditional markets are expected to be pedestrian at best, or at least paler than the returns of the past 10 years.

Historical returns from PE have been strong, and investors get the benefit of an investment uncorrelated with traditional markets. For institutions and private investors who can stomach the illiquidity, a PE investment is attractive…