Understanding listed private equity and its role in modern portfolios
Private equity has long played an important role in institutional investing. Pension plans, endowments, and foundations have used it for decades to diversify portfolios and to access parts of the economy that aren’t available through public markets. For many individual investors, however, private equity has traditionally felt complex, inaccessible, or difficult to integrate into a broader investment strategy.
In recent years, that gap has started to narrow. A range of investment solutions now provide ways for investors to participate in private‑ market activity without needing to invest directly in private equity.
One example is investing in listed private equity issuers, which focuses on publicly traded companies whose businesses include investing in, financing, or managing private companies and private equity funds.
Importantly, this type of exposure can be accessed through familiar investmentfunds or segregated fund structures, rather than through traditional private equityvehicles. That means investors can gain insight into private market while stayingwithin a structure they already understand - one that offers daily pricing,transparency, and easier portfolio integration.
To understand why this matters, it helps to step back and look at what private equityis and why the way exposure is constructed may make a meaningful difference overtime.
What makes private equity different
At its core, private equity involves investing in companies that are not publiclytraded. These businesses may be earlier in their growth cycle, privately owneddivisions of larger organizations, or companies undergoing transformation. Unlikepublic equities, which are subject to daily market pricing and short‑termperformance pressures, private equity investments are often managed with alonger‑term time horizon.
Investors are drawn to private equity for several reasons. Returns are typically drivenmore by operational improvement, business growth, and strategic decision‑makingthan by market sentiment. The asset class can also offer diversification benefits, asprivate market returns are typically influenced by different economic drivers thanthose of traditional public equities.
Private equity investments are generally more complex, less liquid, may be higherrisk, and require greater expertise to source and manage. As a result, they havetypically been available to a narrower group of investors, which has historicallylimited broader access.
The role of listed private equity issuers
Listed private equity issuers offer a different way to gain exposure to private ‑marketactivity. Rather than investing directly in privately held companies or private funds,investors can gain exposure through public issuers whose securities are listed on astock exchange and whose principal business is to invest capital in privately heldcompanies. These issuers also include global private equity firms and alternativeinvestment asset managers whose earnings are closely linked to private marketgrowth alongside other sources of business income.
Because these issuers trade on public exchanges, listed private equity issuers offerseveral practical benefits, including higher liquidity and transparent pricing., At thesame time, their underlying economics are generally tied to private market activity,which may result in return patterns that differ from those of broad public equityindices.
For retail investors, listed private equity issuers can act as a bridge, providing accessto private market exposure without the complexity, high minimum investments, oreligibility requirements that often limit direct private equity investments.
Why construction matters
While listed private equity issuers help improve accessibility, the way exposure isbuilt plays a critical role in portfolio design. Many traditional equity strategies rely onstandard market‑capitalization indices, which weight companies based on theirshare price and size. These indices are effective tools for measuring markets, butthey were never designed to create balanced investment portfolios.
Over time, cap‑weighted indices may become concentrated in a smaller number oflarge firms or skewed toward particular regions or subsectors. As markets move,investors may unknowingly take on unintended risks including concentration risk,valuation sensitivity, or momentum effects that have little to do with the long‑termfundamentals of the underlying businesses.
This challenge is not unique to private equity issuers. It exists across public marketsmore broadly. The difference is that in a specialized area like listed private equityissuers, concentration and structural imbalances can be amplified.
An active management approach
Some investment managers take an active management approach, recognizing thatbenchmarks should be reference points rather than rigid instructions. Instead oftracking an index, they seek to correct for structural inefficiencies - aiming to reduceconcentration and manage unintended risks.
Keyridge Asset Management Limited, which sub‑advises Counsel Global ListedPrivate Equity Pool, applies this kind of framework. Their approach emphasizesdisciplined portfolio design, systematic research, and tight risk controls. While theunderlying process is sophisticated, the philosophy is straightforward: returnsshould come from company‑level fundamentals and long‑term business outcomes,not from exposures to size, geography, or market trends.
Listed private equity issuers and private asset classes together
Listed private equity issuers and private asset classes can serve different purposes,and they can complement each other effectively. Listed private equity issuers offerliquidity, transparency, and ease of access. Private asset classes have the potential toadd depth, and exposure to private companies earlier in their development.
Combining both approaches can help broaden exposure across the private marketlandscape, capturing the accessibility of public markets alongside the long‑termcharacteristics of private market investments. The Counsel Global Listed PrivateEquity Pool is designed to provide investors with access to global listed privateequity issuers, complemented by a small allocation dedicated to private equity andprivate credit vehicles.
Where private equity fits in a portfolio
Private equity, whether accessed through publicly listed issuers, private assetclasses, or a combination of both, plays a complementary role by helping diversifyreturn sources and reduce reliance on traditional market drivers.
As with any investment, it involves risks and requires a long‑term perspective. Butwhen approached carefully, private ‑equity ‑related strategies , including bothprivate and listed approaches, may offer investors a way to participate in differentsegments of economic growth while helping to maintain a balanced overall portfolio.
A broader philosophy
Ultimately, the importance of private equity is less about any single product andmore about how investors think about diversification, risk, and access. Markets areincreasingly shaped by a small number of large public companies, and traditionalindices do not always spread risk as evenly as they appear.
Thoughtful approaches –grounded in an understanding of benchmarks whileallowing for flexibility- can help investors navigate these realities. The goal remainsthe same: to build portfolios that are intentional, diversified, and aligned withlong‑term objectives.
To learn more about Listed Private Equity opportunities, including the mutual fund offered through Counsel Portfolios and the segregated fund offered through Canada Life, contact your advisor.
The views expressed in this commentary are those of Canada Life Investment Management Ltd. and Canada Life as at the date of publication and are subject to change without notice. Prospective investors should review the offering documents relating to any investment carefully before making an investment decision and should ask their advisor for advice based on their specific circumstances. The content of this material (including facts, views, opinions, recommendations, descriptions of or references to, products or securities) is not to be used or construed as investment advice, as an offer to sell or the solicitation of an offer to buy, or an endorsement, recommendation or sponsorship of any entity or security cited. Although we endeavour to ensure its accuracy and completeness, we assume no responsibility for any reliance upon it.
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