Private equity has long been sought by institutional investors for its attractive risk/return profile and its relatively low correlation to other asset classes, making it a desirable investment from a diversification standpoint and long-term growth potential. While it may seem complex and carry a certain “mystique,” in simple terms, it’s a way to gain exposure to nonpublic companies that don’t trade on an exchange. Many well-known companies are either currently private or have received private-equity backing early in their business lifecycle ahead of their eventual initial public offering (IPO).

¹ OECD, 2019.

² Statista, 2020.

³ Tender offers are subject to the approval of a fund’s Board of Trustees. Shareholders generally will not have the right to require a fund to repurchase shares. A 2% early repurchase fee is often imposed on tendered shares held less than one year.

⁴ An accredited investor is a person or entity that is allowed to participate in investments not registered with the SEC. These are typically high-net-worth individuals and companies with the means and experience to trade private, riskier investments.

⁵ A qualified purchaser is a legal term not based on net worth or income but, rather, on investment holdings. Qualified purchasers must meet higher standards so that funds with a small group of private-equity investors can buy and sell public assets.

Important Risks: Investing involves risk, including the possible loss of principal. • Private equity investments involve a high degree of business and financial risk that can result in substantial losses. The valuation of private equity investments is complex and is typically based on fair value. • Illiquid and restricted securities may be difficult to dispose of at a fair price. A particular investment may become illiquid, making it difficult to sell that investment at an advantageous time or price. • Foreign investments may be more volatile and less liquid than US investments and are subject to the risk of currency fluctuations and adverse political, economic, and regulatory developments.

Diversification does not eliminate the risk of experiencing investment losses.

The views expressed here are those of the authors and should not be construed as investment advice. They are based on available information and are subject to change without notice. Portfolio positioning is at the discretion of the individual portfolio management teams; individual portfolio management teams, and different fund sub-advisers, may hold different views and may make different decisions for different clients or portfolios. This material and/or its contents are current as of the time of writing and may not be reproduced or distributed in whole or in part, for any purpose, without the expresss written consent of Hartford Funds.