Mom and Pop Should Be Free to Take a Pass on Private Equity
Although average investors deserve equal access to the funds, the luster has worn off.
Go ahead and walk on by.
Photographer: Daniel Guimaraes/AFP/Getty Images
Groucho Marx once joked, “I don’t want to belong to any club that would have me as a member.”1 That’s essentially how ordinary investors should feel about private equity.
Every investor — big or small, ordinary or well-heeled, 12 figure or four — should have equal access to markets. That’s a perfectly banal observation in most contexts, but it’s wildly controversial when it comes to investing. Ordinary investors are routinely denied access to the choicest investments, often based on the patronizing premise that they’re too unsophisticated to participate in some segments of the market. By the time those segments finally open to them, the trades are inevitably crowded and much of the value is depleted. What’s left is more risk than reward.