Private equity used to be something most individual investors rarely encountered. Today, private banks, financial advisers and investment platforms are increasingly offering access to it.

Why the change?

Private equity has become easier for individual investors to access, but that is only part of the story. Asset managers are also looking beyond their traditional sources of capital and increasingly towards private wealth.

Understanding both sides helps investors decide whether this growing access to private equity is actually useful for them.

Private Equity Was Mainly for Institutional Investors

Traditional private equity was designed mainly for institutional investors such as sovereign wealth funds, insurance companies, university endowment funds and large pension funds. These organisations manage large pools of money and have professional investment teams that can handle long investment periods and more complicated cash-flow arrangements.

For example, an investor might commit $1 million to a private equity fund without paying the entire amount immediately. The fund manager asks for portions of the money over several years as suitable investments are found. These requests are known as capital calls.

Think of a major home renovation. You may agree to a $200,000 project, but you don’t necessarily pay the contractor the full amount on the first day. Payments are made at different stages as the work progresses.

Private equity can work in a similar way. The difference is that investors need to keep enough money available to meet those future capital calls, even though the exact timing may not always be known.

For institutional investors with professional teams managing their investments and cash flows, this is manageable. For many individuals, it is less convenient, especially when their money may also be tied up for ten years or longer.

The Private-Equity Industry Needs New Sources of Capital

Private equity managers need to keep raising money to invest in new companies. Traditionally, much of that money came from institutional investors.

In recent years, however, fundraising has become more difficult. One reason is that private equity funds have been taking longer to sell some of the companies they own, which means money has also been returning to existing investors more slowly.

McKinsey reported that private equity funds returned cash equal to about 6% of their assets in the 12 months to June 2025, compared with an average of about 16% between 2015 and 2019.

This matters because money returned from older investments can be used to invest in new private equity funds. If less money comes back, institutional investors may have less capacity or willingness to make new commitments.

It’s similar to waiting for an existing investment to mature before deciding whether to make another one. If your money remains tied up much longer than expected, you may delay the next investment.

For private equity managers trying to raise new funds, this creates an incentive to look for additional sources of capital.

Why Individual Investors Matter

A significant amount of global wealth is held by individuals and families rather than institutional investors. For asset managers, this represents a large additional source of potential investment capital.

At the same time, some individual investors genuinely want access to private companies and investment opportunities that were previously difficult for them to reach. Asset managers gain access to another pool of capital, while investors gain access to an asset class that was previously much harder to invest in.

This doesn’t automatically make private equity good or bad for individual investors. It simply explains why both sides may be interested. The challenge was finding a structure that made private equity easier for individuals to invest in.

That is where evergreen funds have become important.

Evergreen Funds Can Work for Both Sides

Traditional private equity funds normally have a limited life. They raise money, invest it, hold the investments for several years, sell them and eventually return the money to investors.

An evergreen fund is different. It can continue operating without a fixed end date. New investors can enter, investments can be bought and sold over time, and money received from investments that are sold can be reinvested.

This can make private equity much easier for individual investors to access. Depending on the fund, investors may benefit from lower minimum investment amounts, simpler administration, immediate exposure to an existing portfolio and no need to manage the traditional capital-call process. Some evergreen funds also allow investors to request withdrawals at regular intervals.

The market has grown considerably. MSCI reported in 2026 that evergreen private-market funds had grown beyond US$500 billion, with private-wealth investors representing a meaningful share of these assets.

Evergreen funds can also be attractive to asset managers. Instead of raising a fund that eventually closes and then starting the fundraising process again, an evergreen fund can potentially continue for much longer. New investors can join and money from investments that are sold can be reinvested. This can provide asset managers with a longer-term pool of money to manage and, depending on the fee structure, continuing management fees.

There is, however, one feature investors need to understand particularly well: liquidity.

“Semi-Liquid” Doesn’t Mean Fully Liquid

Some evergreen private equity funds are described as semi-liquid because investors may be allowed to request withdrawals periodically, such as every quarter.

The important point is that a withdrawal request may not always mean you will receive all your money immediately.

Imagine a property fund that allows investors to request withdrawals every quarter. If only a small number want their money back, the fund may be able to manage those requests. But if many investors want to withdraw at the same time, the fund cannot simply sell several buildings overnight.

Private equity faces a similar issue. Funds therefore commonly place limits on how much can be withdrawn during each period. If withdrawal requests are too high, some may have to be reduced or delayed.

Even though the fund offers periodic withdrawals, the companies it owns are still private businesses. Unlike listed shares, they cannot necessarily be sold quickly to raise cash.

The fund may offer some liquidity. The underlying private investments are still illiquid.

This becomes especially important during difficult markets, when more investors may want their money back at the same time. Investors should therefore understand exactly what “semi-liquid” means before assuming it offers the same flexibility as investments that trade regularly on public markets.

Why Investors Are Hearing More About Private Equity

Asset managers are increasingly working with private banks, wealth managers, financial advisers and investment platforms to reach individual investors. This means private-market investments are appearing more frequently in conversations that individual investors have about their portfolios.

Greater visibility, however, does not necessarily mean the investment opportunity itself has suddenly become better. It may also mean the industry has become better at packaging and distributing private equity to a wider group of investors.

An investment should be evaluated based on what it owns, its potential return, its risks, its costs and the role it plays in a portfolio — not simply because it has become more widely available.

Easier Access Doesn’t Mean Lower Risk

The growing availability of private equity to individuals is sometimes described as the democratisation of private markets.

There is some truth to this. Investment minimums can be lower, administration has become easier and investors can access private markets through structures that did not previously exist.

But easier access doesn’t change the underlying investment. Private companies still face business risks. Their valuations still require judgement because there isn’t a market price available every day. Borrowing can still magnify both gains and losses. Performance can vary considerably between fund managers, and selling private companies at attractive prices can take time.

This is similar to what happened with stock investing. Mobile trading has made buying shares dramatically easier, but pressing a button on a phone doesn’t make the company being purchased less risky.

Access has improved. The underlying investment risks have not disappeared.

What Should Investors Ask?

Individual investors don’t need to become private equity experts before considering an investment, but they should understand what they are getting into.

Can I get my money back when I need it?

Understand how often withdrawals are allowed, what limits apply and what happens if too many investors want to withdraw at the same time.

What does the fund actually own?

“Private equity” is a broad description. Understand what businesses or funds your money is ultimately invested in.

How are the investments valued?

Private companies don’t have a market price every day, so understand how and how often their values are estimated.

What are all the costs?

Look beyond the headline management fee. There may also be performance fees and other fund expenses.

How much borrowing is involved?

Borrowing can increase returns when things go well, but it can also increase losses.

How much of the reported return has actually been realised?

A profit from a company that has already been sold is different from an increase in the estimated value of a company that is still held by the fund.

And perhaps the most important question:

Why does this investment belong in my portfolio?

Private equity may provide access to businesses that are unavailable through public markets and potentially offer a different source of return. Those can be valid reasons for investing.

But investing simply because private equity has become available, is not enough.

Money & Macro Takeaway

Making private equity easier for individual investors to access is not necessarily a bad development. New fund structures have removed some of the barriers that previously kept private equity mainly within the institutional world.

At the same time, asset managers have commercial reasons to reach individual investors. Private wealth provides another large source of capital and evergreen funds can provide a longer-term pool of money to manage.

Better access ≠ automatically a better investment.

Think of a supermarket putting a product on more shelves. It becomes easier to find and buy, but that doesn’t tell you whether it belongs in your shopping basket.

Before investing, understand not only what is being offered to you, but why it is being offered to you.

Private Equity series

Research sources

Money & Macro by NorthAxis

This post is for general educational purposes only and does not constitute financial advice or a recommendation to buy or sell any investment product. Investors should consider their own objectives, financial situation, and risk tolerance before making any investment decision.