>And this isn’t just about the recent glut of capital raised, lagged returns and private equity exit blockages either.<p>Lagged returns is exactly the explanation here. They publish the table of investments and returns by year. Obviously you don't get your money back the same year you invest it. It's more often a ~7 year investment. But let's round down to 5 years.<p>Look at the chart and compare the investment in PE to the return 5 years later. It's a gain of 80-100% in that time.<p>This is simply how the math works when the investments into a strategy are growing exponentially, with a delayed return. It can continue indefinitely to produce 100% returns for investors, while a snapshot at any given time will make it look like the strategy has lost money overall.
My opinion is that private equity is the biggest scam of them all.<p>It’s essentially just money poured in unregulated markets, fueling unaudited businesses very often highly in debt and running on very shaky grounds, in such way that they could have never been listed publicly. The whole private equity sector is kept alive only by more money poured into system and more debt, in the end looking very similar to a pyramid scheme.
They don't define their terms.<p>> Hedge Fund<p>> A hedge fund is a limited partnership of private investors whose money is pooled and managed by professional fund managers. [1]<p>> Private capital / equity<p>> Private equity describes investment partnerships that buy and manage companies before selling them.<p>> Private equity is often grouped with venture capital and hedge funds as an alternative investment.<p>Then, interestingly, they've been more fashionable lately:<p>> The private equity industry has grown rapidly amid increased allocations to alternative investments and following private equity funds' relatively strong returns since 2000.<p>Which might explain why working at public companies has been so crappy for the past several years.<p>But the best bit comes from this article [3]:<p>> One hedge fund manager currently trying to raise capital said investors often cited the lack of distributions they had received from their private equity investments as a reason why they would not invest.<p>They won't invest in a safer bet, because they got burned by a bad one. Amazing. No wonder it's so easy to make money investing for people/orgs with money if this the behaviour you can expect from them. Is it really as simple as: "Hey I heard this was a good investment, give me money."? If that's an example of the simple-minded thought process that investors go through, it must be so simple to earn money this way.<p>[1] <a href="https://www.investopedia.com/terms/h/hedgefund.asp" rel="nofollow">https://www.investopedia.com/terms/h/hedgefund.asp</a><p>[2] <a href="https://www.investopedia.com/terms/p/privateequity.asp" rel="nofollow">https://www.investopedia.com/terms/p/privateequity.asp</a><p>[3] <a href="https://www.ft.com/content/62b1db7b-3e78-47ca-865e-02cc404915f0" rel="nofollow">https://www.ft.com/content/62b1db7b-3e78-47ca-865e-02cc40491...</a>
Wouldn't this almost always be the case? To me it's like saying "some stock holdings are not in profit." This is always the case of course unless the stock market across the board is at all time highs.<p>When I invest, and especially if I roll returns into investment, this means as a rule more money is invested than has been returned.
This is silly. It’s complaining that investments made in the last 3 years haven’t returned. None of these investors in recent AI companies including investments in high return investments like Canva or Anthropic expect to have a distribution right now. They invested with a 7+ year horizon.