Are you looking to add an asset to your portfolio with an impressive risk-to-reward ratio? A private equity fund may be an excellent option for you. These funds are an attractive investment prospect thanks to their high levels of diversification and market-beating returns.
In this guide, we will examine the best private equity funds UK, providing you with guidance on what to look for and showing you how to invest with an FCA-regulated broker – without having to pay any commissions!
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- 1 Best Private Equity Funds UK List
- 2 Best Private Equity Fund to Invest in Reviewed
- 3 What are Private Equity Funds?
- 4 Why Invest in Private Equity Funds?
- 5 Best Private Equity Funds Brokers
- 6 How to Invest in Private Equity Funds on eToro Tutorial
- 7 eToro – Invest in the Best Private Equity Funds UK – 0% Commission
- 8 FAQs
Best Private Equity Funds UK List
The list below showcases the top ten best 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.
- HarbourVest Global Private Equity Ltd – Overall Best Private Equity Fund UK – Invest Now
- Main Street Capital Corporation – Best Private Equity Fund UK for Dividend Yield – Invest Now
- KKR & Co LP – Best Private Equity Fund UK for Real Estate Investing – Invest Now
- Pantheon International – Best Private Equity Fund UK with over 35 Years of Experience
- 3i Group PLC – Best Private Equity Fund UK for Venture Capital Investing
- Apax Global Alpha Limited – Best Private Equity Fund UK for Diversification
- HG Capital Trust PLC – Best Private Equity Fund UK for High Returns
- Standard Life Private Equity Trust PLC – Best Private Equity Fund UK for Investing in the European Market
- BMO Private Equity Trust PLC – Best Private Equity Fund UK for Passive Income
- NB Private Equity Partners Ltd – Best Private Equity Fund UK for Long Term Capital Growth
Best Private Equity Fund to Invest in 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.
Most private equity funds only allow high net worth individuals and other accredited investors to invest in them. However, some brokers such as eToro will enable you to invest in the companies that operate the funds, providing you with indirect exposure to the fund’s performance.
In the section below, we will discuss ten of the best private equity funds UK for 2021, helping you to make an effective investment decision.
1. HarbourVest Global Private Equity Ltd – Overall Best Private Equity Fund UK
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 has displayed some fantastic 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. However, with eToro, you can invest in the fund provider, which will give you exposure to the fund’s performance. What’s more, you can do this completely commission-free!
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2. Main Street Capital Corporation – Best Private Equity Fund UK for Dividend Yield
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.
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. Although this fund suffered a setback during the Coronavirus pandemic, its experience combined with attractive yield makes it an excellent option for investors looking to add an additional income stream to their portfolio.
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3. KKR & Co LP – Best Private Equity Fund UK for Real Estate Investing
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.
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 – however, you can invest in the company behind the fund (KKR and Co) with an FCA-regulated broker such as eToro. This will give you indirect exposure to the performance of the fund.
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4. Pantheon International – Best Private Equity Fund UK with over 35 Years of Experience
Pantheon International is one of the best private equity investment funds 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).
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 now 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. If you’re interested in gaining exposure to the Pantheon International fund, you can invest in the company commission-free with eToro!
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5. 3i Group PLC – Best Private Equity Fund UK for Venture Capital Investing
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.
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%. Although venture capital investing can be inherently risky, if you are wondering how to invest £500 or more, investing in 3i Group PLC could be a fantastic option in terms of above-average returns.
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6. Apax Global Alpha Limited – Best Private Equity Fund UK for Diversification
If you’re looking for an inherently diversified investment, then investing in Apax Global Alpha Limited could be a great 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 an excellent dividend yield of 5.29% every year, distributed every December. These factors combine to make Apax Global Alpha Limited one of the best diversified private equity funds you can invest in today.
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7. HG Capital Trust PLC – Best Private Equity Fund UK for High Returns
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.
In terms of performance, HG Capital Trust PLC has provided exceptional 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%. Although this fund is relatively volatile (showcased by the dips and spikes in the price chart), it represents a good high risk investment opportunity for risk-seeking investors looking for high returns.
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8. Standard Life Private Equity Trust PLC – Best Private Equity Fund UK for Investing in the European Market
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.
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%. If you’re happy to take on a little extra risk to gain exposure to the European market, this fund might be worth considering.
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9. BMO Private Equity Trust PLC – Best Private Equity Fund UK for Passive Income
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 Trust ensures a good level of diversification to go along with the attractive passive income stream it provides.
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10. NB Private Equity Partners Ltd – Best Private Equity Fund UK for Long Term Capital Growth
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.
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. If you’re in the market for long term capital growth, it may be worth considering NB Private Equity Partners.
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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 greater 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.
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Private equity funds are provided by a private equity company itself. For example, Main Street Capital Corporation is the 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.
For retail investors, the way to gain exposure to these private equity funds is through investing in the company behind them. Some FCA-regulated brokers, such as eToro, allow you to do this through their online platform. As the company behind the equity fund is influenced by its performance, you can essentially ‘invest’ in the fund by purchasing the underlying company’s stock.
Why Invest in Private Equity Funds?
Private equity funds are an attractive investment for a wide number of reasons. To give you an idea of the benefits behind private equity investing, the section below will discuss three of the key advantages offered by private equity funds.
Potential for High Returns
One of the main reasons to invest in the best 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 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 great 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 the best of the best when it comes to 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. So, the fact that these experts and specialists are essentially in charge of your money means that private equity funds can be considered an attractive investment opportunity.
Significant Diversification Benefits
Another benefit of investing in private equity funds is the inherent diversification advantages 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, which can be an attractive addition to your portfolio.
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. Ultimately, better diversification levels can help optimise your risk/return profile and create more efficient returns for you overall.
Best 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 best 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 of our recommended trading platforms for investing in private equity funds UK, helping you decide which one is best for you.
1. eToro – Best Overall Broker for Investing in Private Equity Funds UK
Our favourite broker when it comes to investing in the best UK private equity funds is eToro. Currently hosting over 20million active users worldwide, eToro is an FCA-regulated broker that is a favourite of many investor types due to its attractive 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 $50 per trade!
Another great thing about eToro is how quick and easy it is to create an account and begin investing. If you spot a good opportunity to invest in a private equity firm, you’ll want to get up and running as quickly as possible. 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.
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.
- Super user-friendly online trading platform
- Invest in private equity funds without paying any commission
- Trade CFDs in the form of stocks, indices, commodities, forex, and more
- 2,400+ stocks listed on the UK and international markets
- 150+ ETFs
- Deposit funds with a debit/credit card, e-wallet, or UK bank account
- Ability to copy the trades of other users
- FCA and FSCS protections
- Not suitable for advanced traders that like to perform technical analysis
- No ISAs or SIPPs
67% of retail investors lose money trading CFDs at this site
2. Fineco – Cost-Effective Platform to Invest in Private Equity Funds UK
If you’re looking for an alternative option to eToro, our second favourite broker when it comes to investing in private equity funds is Fineco. Fineco bank is listed on the Italian stock exchange and is regulated in the UK by the FCA.
One of the great 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.
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 profit 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 buy shares, stocks, bonds, the best ETFs, and FX. This selection is great if you are looking to create a larger portfolio of assets in addition to your private equity fund investment. With 13 stock markets to choose from, and over 5000 ETFs available, Fineco ensures there’s an option for everyone.
- No dealing charges when investing in private equity funds
- Access to thousands of UK and international shares
- Deposit funds with a UK bank account
- Heavily regulated, including an FCA license
- Listed on the Italian Stock Market
- Offers ISAs and SIPPs
- All personal data protected
- 0.25% annual fee when holding funds
- No support for debit or credit cards
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How to Invest in Private Equity Funds on eToro Tutorial
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 our recommended broker, eToro. We are using eToro as an example because you can create an account and finalise your investment in as little as ten minutes!
Step 1: Begin the Account Opening Process
The first step involves starting the signup process. The easiest way is to head to the eToro website and click the ‘Join Now’ button. You can also do this through their investment app. Once you have done this, simply enter the required personal details and choose a username and password.
Step 2: Verify your ID and Address
After you’ve signed up for your account, you’ll have to verify your identity and address before you can make your investment. eToro makes this super easy to do – simply upload proof of ID (a copy of your passport or driver’s license) and proof of address (a copy of a bank statement or utility bill). Once uploaded, eToro will verify your documents, which usually only takes a few minutes.
Step 3: Fund your Account
Now you can deposit money into your account. You can do this via credit/debit card, bank transfer, or e-wallet. All deposit methods are free; however, we recommend using a credit/debit card as the funds will arrive instantly.
Step 4: Search for your chosen Private Equity Fund
Click on the search bar at the top of the screen and type in the company’s name that provides the fund you wish to gain exposure to. For this example, we wish to invest in HarbourVest Global Private Equity Ltd. Once you see the company in the drop-down menu, click ‘Trade’.
Step 5: Invest in Private Equity Fund UK
All that’s left to do now is finalise your investment. Simply enter the amount you’d like to invest (minimum of $50), check everything is correct, and click ‘Set Order’.
And it’s official! You have just invested in a private equity fund provider – all without paying a penny in commission!
eToro – Invest in the Best Private Equity Funds UK – 0% Commission
Throughout this guide, we have examined some of the best private equity funds available in the marketplace, highlighting their key benefits and providing guidance on what to look for before 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, if you’ve made your mind up and wish to get involved in the private equity market, we recommend using eToro to facilitate your investment. Featuring many of the private equity funds on the list earlier in this guide, eToro allows you to invest without having to pay any commissions whatsoever. Also, you can invest from as little as $50 (around £36), meaning you can slowly build up your position rather than having to invest a large amount straight away!
67% of retail investor accounts lose money when trading CFDs with this provider.
What are private equity funds?
The critical distinction between private equity funds and other types of funds is that they invest directly into companies, providing them with capital in exchange for a portion of control over the company. Once involved within the target company, private equity funds will actively try to improve operations to increase the money they can generate from their investment.
How to invest in private equity funds?
Directly investing in private equity funds is usually only possible for high net worth or accredited investors. However, certain brokers such as eToro allow you to invest in the fund provider, thereby giving you indirect exposure to the performance of the private equity fund. Most of the time, these providers are listed on the stock exchange.
How do private equity funds work?
Private equity funds work by pooling money from a range of investors and investing that money directly into companies in exchange for a return on their money. By investing directly into companies, private equity firms are often able to generate higher returns than the market.
Who invests in private equity funds?
There are many types of investor who invest in private equity funds. Examples would be high net worth individuals, insurance companies, pension funds, accredited investors, and even retail investors through FCA-regulated brokers such as eToro.
How many private equity funds are there?
Due to the nature of the sector, information on the specific number of private equity funds is hard to come by. However, in 2018 the Financial Times noted that there were 2296 active private equity funds in the market.