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Questor is The Telegraph’s stockpicking column, helping you decode the markets and offering insights on where to invest for the past six decades.
Private markets can be hard to access. Typically illiquid and opaque in nature, the defining investment under the alternatives banner has rewarded investors who have committed capital over the long term, offering a 14pc annualised total return since 2001 – double that of the FTSE All-Share’s 7pc, according to recent data from the British Private Equity & Venture Capital Association.
However, it cannot be denied that the last two years have been more challenging. Global uncertainties and macroeconomic conditions have weighed heavily on fundraising and realisation volumes, with private equity valuations under pressure as a result. But in the context of a more benign financing environment, we are seeing signs of a rebound in dealmaking, and the flywheel effect of increased exit activity is likely to be an important catalyst for the sector.
Not only are we seeing a turning point in market conditions and transactional activity, but we also note that an increasing proportion of the fastest-growing businesses in the world are private. According to a PwC report from the end of 2024, the combined valuation of the top 100 “unicorns” – privately held start-ups valued at over $1bn (£780m) – has reached over $2 trillion, with fintech, artificial intelligence, information technology and e-commerce standing as the key sectors.
It might feel like a contrarian call but we think the more adventurous investor should consider adding private equity exposure to capture this recovery and to access the growth potential from these private companies.
Enter HarbourVest Global Private Equity (HVPE). Launched in December 2007, the investment trust offers global exposure to private companies through a fund-of-funds structure, leveraging the knowledge base of more than 230 investment professionals who, in turn, provide access to around 650 underlying private equity fund managers.
Over the last 10 years, HVPE has delivered a 13pc annualised net asset value (Nav) total return, outperforming the FTSE All World index TR by three percentage points per year. Currently trading on a 37pc discount, the trust offers an excellent entry point into the recovery in private equity, with a strong portfolio to boot.
The portfolio is highly diversified across regions, industries and investment stage, with firms spread across buyout, venture, private credit, infrastructure and real assets. There is also a range of strategies (primary, secondary and direct co-investment) and vintage profiles (mature, growth, or investment phase).