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Exploring Private Equity: Alternative Investments for a Diversified Portfolio

June 05, 2023

On a recent episode of the Maximizing Outcomes Podcast, we interviewed James Costabile, Managing Director and Head of Alternative Investment Distribution at iCapital. James shared his 25 years of experience in the alternative investment space, and our discussion covered Private Equity, Private Credit, Hedge Funds and Real Estate Investment Trusts. Be sure to check out the full podcast episode here!

Understanding Private Equity:

Private equity is one of the key alternative investment options to consider when diversifying your portfolio. Private equity investments can offer the potential for attractive returns by financing non-public companies. They involve partnering with great managers and entrepreneurs to facilitate positive change and work to maximize business growth. Unlike public equity, private equity allows investors the potential to tap into the experience of successful business owners who understand the value of sweat equity and making hard decisions to drive growth and efficiency.

The Size and Importance of the Private Equity Market:

While public companies receive much of attention in the media, the private equity space has been growing significantly over the years. James reveals that there are currently around 23,000 private equity-backed companies compared to approximately 14,000 publicly traded companies in North America and Europe. Moreover, a substantial number of US companies with over $100 million in revenue are private, comprising about 87% of such businesses. Ignoring private equity means missing out on a significant portion of the equity market, particularly as private companies continue to gain influence and size.

Different Strategies and Approaches in Private Equity:

Private equity is not a one-size-fits-all category. There are distinct strategies and themes within the private equity market, offering investors various options. James highlights two primary categories: leverage buyouts (LBOs) and venture capital. LBOs focus on stable, established businesses with value-driven approaches, while venture capital targets new companies with high growth potential. Growth equity falls between these extremes, targeting higher-growth businesses with stable returns. While the prospect for returns may be attractive, It's crucial for investors to assess their risk tolerance, return expectations, liquidity needs, and long-term investment horizon when selecting private equity options.

Investing in Private Equity - Fund Options and Fund-of-Funds Approach:

Investors have multiple options to access private equity. One approach is to invest in multi-manager vehicles that provide broad exposure to private equity for accredited investors. These vehicles allow investors to fully fund their investments upfront and gain access to portfolios of seasoned investments. Additionally, fund-of-funds provide diversified exposure to private equity by combining different managers and strategies within specific vintages. Another approach is the traditional private equity structure, where investors commit capital to a specific manager who deploys the funds over several years. This approach often requires being a qualified purchaser with significant investable assets.


Diversifying your portfolio with alternative investments like private equity can offer unique opportunities and potentially enhance your returns. Understanding the different types of private equity strategies and how they can fit into your portfolio, is something we can help you navigate. To lean more, simply email us at or schedule time with one of our Wealth Management Advisors.

Listen to the full podcast episode with James Costabile on alternative investments for a deeper dive into the world of private equity and other alternative investments. You can find the episode [here](