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Best Private Equity Funds UK

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A private equity fund may be a potential way to diversify your assets since these funds are an attractive investment prospect thanks to their high levels of market-beating returns.

In this guide, we will examine the Popular private equity funds UK, providing you with guidance on what to look for and showing you how to invest with popular stock brokers in the UK.

Popular Private Equity Funds UK List

The list below showcases ten popular UK private equity funds for 2021. If you’d like to learn more about each of these funds, the section below will examine each of these funds in detail, highlighting crucial information you need to know in order to make an effective investment decision.

  1. HarbourVest Global Private Equity Ltd
  2. Main Street Capital Corporation
  3. KKR & Co LP
  4. Pantheon International
  5. 3i Group PLC
  6. Apax Global Alpha Limited
  7. HG Capital Trust PLC
  8. Standard Life Private Equity Trust PLC
  9. BMO Private Equity Trust PLC
  10. NB Private Equity Partners Ltd

Popular Private Equity Funds Reviewed

Private equity investing offers an attractive investment opportunity for investors worldwide. As private equity funds tend to provide capital directly to businesses, they are in a unique position that allows them to impact the business and boost cash flows – in turn, generating higher returns for investors.

In the section below, we will discuss ten popular private equity funds UK for 2021.

1. HarbourVest Global Private Equity Ltd

The first fund we’ll discuss in this guide is the HarbourVest Global Private Equity fund. Based in the UK, this fund aims to provide returns that are superior to what you can expect to receive from indices such as the FTSE 100. It does this by investing directly into companies to facilitate capital growth but also by investing in other funds too.

HarbourVest Global Private Equity Ltd

HarbourVest Global Private Equity has displayed some solid performance over recent times, returning 120.99% to investors in the last five years. Much like other funds, you cannot directly invest in it unless you are an accredited investor or high net worth individual.

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2. Main Street Capital Corporation

Main Street Capital is located in Houston, Texas, and has provided hundreds of US companies with equity capital over the years. This company works with many middle-market clients from various sectors, using their experience and expertise to optimise business processes and fuel growth. In turn, Main Street Capital can generate a return on their investment, which equates to capital growth for investors.

Main Street Capital Corporation

Listed on the New York Stock Exchange, this company even provides investors with a consistently high monthly dividend which is quite rare for private equity investing, as funds tend to reinvest profits back into other companies. This dividend yield is significant, clocking in at 6.28% annually.

3. KKR & Co LP

With a market capitalisation of nearly $30 billion, KKR and Co LP are among the largest investment funds on our list. This fund specialises in direct investments into many sectors, particularly real estate. It also invests in various other funds in an attempt to generate returns for investors. Through direct investments, KKR & Co can place themselves into their partner companies, transforming business operations from the inside in order to generate more cash flows for investors.

KKR & Co LP

Looking at performance, KKR & Co’s stock was trading at $24.36 a year ago; it is now as high as $51.16, representing an increase of over 100%. Furthermore, the company has just acquired large pieces of real estate in Arizona and Seattle, indicating that stock price could increase further if these deals turn out to be lucrative. Again, as with other funds on this list, you cannot invest directly into the private equity fund unless you are an accredited investor.

4. Pantheon International

Pantheon International is a private equity investment fund UK and was initially launched back in the 1980s. Through their decades of experience and network of relationships, Pantheon aims to outperform market indices through their private equity investing activities. With a current market cap of $1.42 billion, this fund has produced annualised growth of 11.6% since inception (assuming all dividends were reinvested).

Pantheon International

Looking at performance over the past year, Pantheon has returned an impressive 55.40% to investors over the past year alone, meaning if you’d invested £5000 a year ago, you would currently have £7770 (minus fees). Also, the company has performed very well since the downturn caused by the Coronavirus lockdown and has exceeded the previous highs it set before the pandemic.

5. 3i Group PLC

Venture capital is an exciting aspect of finance, as it involves providing capital to startup companies and small businesses that may exhibit incredible growth in the future. Huge companies such as Snapchat and Uber were beneficiaries of venture capital in their early days, showing the growth that can be achieved. 3i Group PLC is a fund that provides this sort of capital to small companies in the hope that incredible levels of development can be achieved.

3i Group PLC

With a market cap of $11.56 billion, 3i Group is headquartered in Connecticut and has returned an impressive 64.45% to investors over the past year. Furthermore, the company even offers a solid dividend to investors with an annual yield of 2.95%.

6. Apax Global Alpha Limited

If you’re looking for an inherently diversified investment, then investing in Apax Global Alpha Limited could be a potential option for you. This company operates a private equity fund that invests in four sectors – technology, services, healthcare, and consumer. By investing in many industries, the fund can cover themselves if one sector experiences a downturn, as there is a chance one of the other sectors would experience an upturn at the same time.

Apax Global Alpha Limited aims to provide investors with both capital growth and an attractive yield. Looking at the former, the company has produced 56.56% returns for investors in the past year alone, easily outperforming indices such as the S&P 500. This fund also offers a high dividend yield of 5.29% every year, distributed every December.

7. HG Capital Trust PLC

HG Capital Trust operates a private equity fund that invests in unlisted companies, aiming to add value to them through operational improvements and margin expansion. Furthermore, the fund invests in companies across various sectors and locations to optimise its risk/return profile.

HG Capital Trust PLC

In terms of performance, HG Capital Trust PLC has provided high returns to investors recently – in the past five years alone, it has generated returns of 181.65% for investors. In addition to the hefty returns, this fund also provides a semi-annual dividend, with a yield of 1.51%.

8. Standard Life Private Equity Trust PLC

If you are looking to invest in a private equity fund to diversify your portfolio geographically, then investing in the Standard Life Private Equity Trust would be a practical option for you. This fund invests directly into companies located throughout Europe but also into other private equity funds too. Using buy-out transactions to facilitate investments, this fund aims to provide long-term total returns to investors worldwide.

Standard Life Private Equity Trust PLC

Looking at Standard Life Private Equity Trust’s performance, you can immediately see the benefits it offers in terms of returns. The fund has generated positive returns in four of the last five years, even returning more than 25% in 2016 and 2017. Furthermore, this fund did generate a small negative return of 4.6% in 2020; however, this was much less than its benchmark index (FTSE Allshare), which produced a negative return of 16.6%.

9. BMO Private Equity Trust PLC

As mentioned previously, many private equity funds choose to reinvest profits entirely and not offer a dividend to investors. However, one fund that does provide a healthy dividend is BMO Private Equity Trust. Supplying investors with an annual yield of 4.17%, this fund delivers consistent, passive income that is higher than most ISA’s.

BMO Private Equity Trust fund these dividend payments through profits generated from capital growth through their investment activities. In addition to dividend payments, this fund has also showcased some impressive performance in recent times, producing growth of 25.68% for investors over the past year. Furthermore, with investments into countries such as the US, UK, France, and Germany, the BMO Private Equity

10. NB Private Equity Partners Ltd

The last fund we will discuss is the fund offered by NB Private Equity Partners Ltd. This fund is listed on the London Stock Exchange and invests in direct private equity investments alongside other private equity firms – also known as a co-investment. Through these investments, the fund aims to supply healthy capital appreciation whilst keeping risk to a minimum.

NB Private Equity Partners Ltd

Although private equity investing is inherently risky, this fund tries to minimise the risk through large-scale diversification. In terms of returns, the fund has performed very consistently over recent years, returning an incredible 62.57% in the last year alone. Looking at the price chart, you can see a consistent upward trend, and even when there was a drawdown, the fund has recovered every time.

What are Private Equity Funds?

Private equity funds are a type of closed-ended fund that invest directly into companies to improve them and therefore generate capital growth. This type of investing makes them very different from other fund types such as hedge funds and bond funds, as they provide capital directly to companies and then actively try to optimise their operations to increase cash flow. Private equity funds create income for themselves by a combination of cash flows generated from companies they invest in and also through management and performance fees they collect from investors.

These types of funds are an exciting prospect for investors as they serve as an alternative investment fund that can generate high returns than market indices. Furthermore, private equity funds are invariably managed by some of the world’s top experts, meaning you get exposure to an asset that is actively managed by the best in the business.

invest in UK private equity funds

Private equity funds are provided by a private equity company itself. For example, Main Street Capital Corporation is a private equity company, and they operate their own fund whereby they conduct private equity investing. This distinction is essential, as investing directly into the fund is often reserved for high net worth individuals, accredited investors, and other entities such as pension funds and investment trusts.

Why Invest in Private Equity Funds?

Private equity funds can be a possible investment option for users. Here are a few factors that may affect your investment decision in Private Equity Funds.

Potential for High Returns

One reason to invest in a popular private equity investment funds UK is that they can often produce returns that are far higher than what you can get from other assets in the market. Looking at the data, private equity has frequently delivered higher returns than other asset types in the US, beating indices such as the Russell 2000 and the S&P 500 consistently over the past twenty years. To provide an example, the image below showcases the type of returns that a private equity firm can produce over a five year period.

private equity funds returns

Private equity funds can do this so consistently because they invest directly into companies and actively help improve them. Compare this with other fund types that passively invest in companies, and you can see that private equity firms are better placed to create better cash flows. When cash flows increase and companies begin to improve, this translates into better returns for the private equity fund and its investors.

Access to Leading Financial Experts

Another reason to invest in private equity funds is that they are operated by some of the leading experts within the financial field. As these funds often have market caps of $10 billion or more, they tend to attract many fund managers and analysts. Due to this, the companies the fund invests in have a better chance of offering growth potential.

Furthermore, private equity funds often employ specialists who can aid in transforming businesses they invest in. This active approach ties into the previous benefit, whereby these specialists can tangibly impact the returns the company can create.

Significant Diversification Benefits

Another feature of investing in private equity funds is the inherent diversification benefits provided by these funds. As private equity funds tend to invest across multiple sectors, they offer an asset that gives exposure to various uncorrelated industries.

Furthermore, certain funds will also focus on specific geographic regions – for example, the Standard Life Private Equity Trust invests primarily in Europe. Due to this, they can add another layer of diversification to your portfolio if you are biased towards another country or region.

Popular Private Equity Funds Brokers

Now that you’ve got an idea of what private equity funds can offer as an investment, it’s time to discuss another crucial aspect of the investment process – choosing a reliable stock broker.

With so many options out there, it can be overwhelming when deciding which broker to go with. Not to worry – in this section, we will examine two popular stock brokers that allow users to invest in private Equity Funds.

1. eToro

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Currently hosting over 20million active users worldwide, eToro is an FCA-regulated broker that is a popular choice of many investor types due to its simple fee structure and extensive asset selection.

When investing in private equity funds, you must consider the costs associated with doing so. Depending on who you invest with, many types of fees can spring up, which can make it an expensive process. However, eToro allows you to invest in private equity companies without having to pay any commission whatsoever. Furthermore, you can begin investing from as little as $10 per trade.

With eToro, you can have an account set up in as little as ten minutes. In addition to this, you can fund your account through a multitude of methods, including credit/debit card, bank transfer, and various e-wallets.

etoro private equity investment funds

Finally, if you’d like to invest in other assets alongside private equity funds, then eToro has you covered. Offering over 2000 stocks, along with hundreds of ETF’s, you can invest in commodities, and even trade cryptocurrency, eToro ensures there is a vast pool of assets to choose from when constructing your portfolio.

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2. Fineco

Fineco logo

Fineco bank is listed on the Italian stock exchange and is regulated in the UK by the FCA.

One of the beneficial things about using Fineco for your investing is their low fees when trading. If you are looking to invest in private equity companies to obtain exposure to their funds, you can do so with Fineco for a set commission – $3.50 per investment in US-based stocks and £2.95 per investment in UK-based stocks. This commission level does not change, even when using large investment amounts.

fineco fund fees

You can deposit for free into your Fineco account via bank transfer, with funds usually taking 2-3 days to arrive. Furthermore, if you make a profit on your private equity fund investing, you can withdraw this for free via bank transfer or credit/debit card. The withdrawal process at Fineco is swift, usually arriving in your account within one business day.

Finally, you can also trade a wide range of asset classes with Fineco, you can purchase shares, stocks, bonds, the popular ETFs, and FX. With 13 stock markets to choose from, and over 5000 ETFs available, Fineco ensures there’s an option for everyone.

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How to Invest in Private Equity Funds

If one of the private equity funds on our list has caught your eye, and you’ve decided you’d like to invest, then this section will highlight the crucial information you need to know to make this investment.

The steps below will show you the exact process you need to follow to invest in a private equity fund with your preferred stock broker of choice.

Step 1: Open an Account

Head over to the homepage of your chosen broker and begin the account set-up process. You will be required to fill in your personal details – including your full name, email address and mobile number. Create a username and password for the platform to continue.

Step 2: Complete the Verification Process

Most reputable brokers in the UK are regulated by the FCA – which is why users may be required to verify their accounts. To do this, simply upload proof of ID (a copy of your driver’s license or passport) and proof of address (a copy of a bank statement or utility bill). Once these documents have been uploaded, your broker should verify them in a couple of minutes.

Step 3: Deposit funds

The next step is to deposit funds into your trading account. Most brokers may support 1 or more of the following payment methods:

  • Credit card
  • Debit card
  • Bank transfer
  • e-wallet

Choose your preferred payment option and deposit the funds into your account.

Step 4: Invest in Private Equity Funds

Once your account has been funded, proceed to search for any Private Equity Funds you wish to purchase on your platform’s search bar. Fill in the amount you want to credit into the trade, and confirm your transaction.

Conclusion

Throughout this guide, we have examined some of the popular private equity funds available in the marketplace, highlighting their main features and factors for investing. With private equity funds becoming an increasingly popular asset due to benchmark-beating performance and attractive diversification benefits, you must do your due diligence and cover all the bases before making your investment decision.

However, you should make sure to only invest after conducting your own due-dilliegence. If you choose to invest in this asset class, you should do so with a popular stock broker that caters to your investing needs.

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Connor Brooke author check sign Pro Investor

Connor is a Scottish financial expert, specialising in wealth management and equity investing. Based in Glasgow, Connor writes full-time for a wide selection of financial websites, whilst also providing startup consulting to small businesses. Holding a Bachelor’s degree in Finance, and a Master’s degree in Investment Fund Management, Connor has extensive knowledge in the investing space, and has also written two theses on mutual funds and the UK market.

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