Private equity is becoming a top choice for high-net-worth investors in 2025, and the reasons are clear. With stock markets facing frequent ups and downs, inflation staying stubbornly high, and bonds offering only modest returns, wealthy investors are looking for better places to put their money.
More and more, they’re finding that in private equity.
The numbers show just how big this shift is. As of early 2025, private equity assets under management (AUM) have climbed to around $8.6 trillion, almost double what they were six years ago. Industry forecasts expect that figure could cross $10 trillion by the end of 2026.
A lot of this growth is coming straight from individual wealthy investors who want more control over their portfolios and stronger returns.
Over 48% of high-net-worth investors now say they plan to increase their private equity investments in the next two years, up from just 29% back in 2019. They’re drawn by the chance to earn higher long-term gains and by the fact that private equity doesn’t move in lockstep with the daily ups and downs of public stock markets.
There’s another big factor at play. Private equity often gives investors a chance to own parts of companies before they go public or get bought out—opportunities that used to be open only to large institutions.
Today, new fund structures, online platforms, and lower minimum investments are making it easier for wealthy individuals to get a seat at the table.
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What Is Private Equity Investments?
Private equity is simply investing money directly into private companies—businesses that aren’t listed on public stock exchanges—or buying them outright through special funds. Unlike buying shares of Apple or Tesla on the stock market, private equity lets investors own a piece of companies long before they go public or get acquired.
These investments usually come through private equity funds, which pool money from multiple investors to buy, improve, and later sell businesses for a profit.
The typical life cycle of a private equity fund runs 8 to 12 years. During this time, fund managers—often called general partners (GPs)—look for promising companies, help them grow, and then look for an exit, whether through an IPO or a sale to another firm.
Investors who put up the money are known as limited partners (LPs), and they share in the profits when the fund exits those businesses.
It’s a hands-on style of investing. As Blackstone CEO Stephen Schwarzman often puts it, “Private equity isn’t just about capital—it’s about building better companies.” That means private equity teams don’t just buy and wait; they actively work to boost a company’s value by improving operations, expanding into new markets, or making strategic acquisitions.
For high-net-worth investors, this approach offers something they can’t always get in the public markets:
- Early access: owning growth-stage businesses that could become the next big thing.
- More control: since fund managers often sit on boards and directly influence business decisions.
- Alignment: because GPs usually invest their own money alongside investors, everyone’s interests stay tied to growing the company’s value.
To make it even clearer, here’s a quick snapshot of how private equity typically works:
| Step | What Happens |
|---|---|
| Fundraising | Private equity firms raise money from investors. |
| Investment Period | They buy companies with strong growth potential. |
| Value Building | Help these companies grow and improve operations. |
| Exit | Sell or take the company public, aiming for profit. |
| Distribution | Return capital and profits to investors. |
This model has stayed remarkably consistent, but what’s changing is who gets to take part. As we’ll see in the next sections, more high-net-worth investors are moving into private equity, drawn by the potential for higher returns, steadier portfolios, and exclusive opportunities once reserved only for massive institutional players.
Historically Higher Returns
One of the biggest reasons high-net-worth investors are putting more money into private equity is simple: the returns. Over the long run, private equity has consistently outperformed public markets, often by a wide margin. This performance edge is a major draw for investors who want to grow their wealth beyond what they might get from traditional stocks and bonds.
Let’s look at the numbers. According to the latest data covering global funds from the past 20 years, private equity has delivered an average annual net return of 13% to 14%, compared to around 8% for global public equities over the same period.
Even looking at the last decade, private equity kept its lead with average annual returns of about 12%, while global stock indices hovered closer to 7% to 8%.
As BlackRock’s Larry Fink recently put it, “Private markets continue to outpace public markets, and we believe this will only accelerate in the coming years.”
His view lines up with forecasts suggesting private equity could keep delivering excess returns of 400 to 600 basis points over public stocks through 2026, especially as more institutional money—and now individual wealth—flows into these funds.
Why does private equity generally do better? A few clear reasons stand out:
- Active involvement: Private equity firms don’t just buy shares and hope for the best. They work closely with management teams, restructure operations, expand into new markets, or bring in new leadership to unlock value.
- Longer time horizons: Unlike public shareholders worried about quarterly earnings, private equity investors focus on multi-year growth strategies, which often produce bigger payoffs.
- Access to exclusive deals: Many of the best investment opportunities never make it to the public markets. Private equity funds often scoop up these companies early, then grow them behind the scenes.
There’s also a disciplined exit approach. Private equity funds typically have clear timelines to sell businesses, often aiming for a sale or IPO once the company has hit key growth targets. This structured approach helps lock in returns rather than letting gains drift with market moods.
It’s no surprise then that high-net-worth investors are increasingly attracted by these numbers. Many see private equity as a way to “put their money to work in strategies that aim to beat the market, not just follow it,” as a managing director at a leading private equity advisory recently put it.
Reduced Portfolio Volatility
Besides aiming for higher returns, many high-net-worth investors turn to private equity because it can help smooth out the ups and downs in their overall portfolios. In a world where public markets often swing wildly on headlines or sudden shifts in investor mood, private equity offers a bit of calm.
Part of this comes down to how private equity is structured. Since these investments aren’t priced every second like stocks on an exchange, they don’t reflect daily market noise.
As a result, private equity valuations usually move more gradually. This helps reduce the sharp volatility that investors often see with public equities.
Recent studies show just how powerful this effect can be. Data from global wealth reports in 2024 found that adding a 20% allocation to private equity in a typical balanced portfolio cut annual volatility by roughly 1.5 percentage points—dropping from around 10.2% to 8.7%—while actually lifting overall expected returns.
Industry veterans like KKR’s co-CEO Scott Nuttall often say, “Private equity gives investors the chance to ride out short-term storms and focus on long-term value creation.” This is one of the key reasons more wealthy families and individuals are shifting money into these funds. They’re looking for assets that won’t react instantly to every piece of economic data or geopolitical shock.
Private equity also tends to have low correlation with traditional public assets. During periods when stock markets pull back sharply, private equity often holds its ground better.
For example, during the sharp market decline in early 2020, the average global private equity fund marked down by only 6%, compared to more than 20% drops in major public equity indices.
For high-net-worth investors, this steadier ride is worth a lot. Many already have substantial exposure to listed stocks and bonds, so adding private equity provides a layer of diversification that can protect wealth through different market cycles.
Access to Exclusive Opportunities
One of the biggest reasons high-net-worth investors are moving more of their money into private equity is the chance to access deals most people never see. Unlike stocks that trade on public exchanges, private equity investments often involve direct stakes in companies that are still private—sometimes even before they become household names.
As a senior partner at Carlyle recently put it, “Private equity is all about investing where others can’t, long before a company ever rings the opening bell.” This early access can be incredibly valuable. It means investors get to participate in growth stories while they’re still building momentum, not after most of the upside is priced in.
For example, many leading private equity funds backed companies like Airbnb, Stripe, and SpaceX years before these businesses made headlines or went public. Investors in those early rounds often saw multiples on their money that would be hard to match in listed markets.
The data backs this up. According to a 2024 global private capital study, more than 62% of private equity-backed companies that exited in the past five years generated at least a 2.5x return on invested capital, compared to the roughly 1.5x median multiple seen in comparable public market buy-and-hold strategies over the same period.
It’s not just about high-growth tech either. Private equity funds also take controlling stakes in more traditional industries—manufacturing, healthcare, consumer goods—where they can drive operational improvements and strategic growth. This hands-on approach often leads to performance gains that wouldn’t be possible in a passive public investment.
And for wealthy investors, there’s something else that makes private equity stand out: these deals often come with co-investment opportunities. This means they can put additional money directly into specific companies alongside the main fund, with lower fees and greater potential upside.
As Bain & Company highlighted in a recent outlook, co-investment volumes have doubled since 2018, underlining how much private capital wants direct exposure.
All of this combines to offer high-net-worth investors a chance to own slices of promising businesses and industry transformations that simply aren’t available through public markets.
As one of our analysts summed it up, “This is where value is created, not just traded.”
Increased Accessibility
Not long ago, private equity was a playground mostly reserved for large institutions—pension funds, sovereign wealth funds, and massive endowments. Minimum investments often started at $10 million or more, putting them far out of reach for even most high-net-worth individuals.
But that’s rapidly changing, and it’s one of the biggest reasons wealthy investors are now flocking to private equity.
Over the past few years, private equity firms have actively looked for ways to open the door to more private capital.
As Blackstone’s President Jon Gray often says, “The future of our industry is tapping the enormous pool of individual wealth that’s still largely unallocated to private markets.”
And the numbers prove there’s plenty of room to grow. Even today, less than 5% of total high-net-worth assets globally are allocated to private equity, compared to over 25% for big institutions.
To close this gap, the industry is getting creative. Many firms have launched feeder funds and semi-liquid private equity products that allow individuals to invest with minimums starting around $100,000, far lower than traditional buyout funds.
Meanwhile, online platforms are making it easier for wealth managers and individual investors to access vetted private equity opportunities with simplified onboarding and digital reporting.
There’s also been a sharp increase in “evergreen” private equity structures—funds that don’t have a fixed end date but instead allow investors to commit and redeem capital at scheduled intervals. This approach provides more flexibility than the traditional 10-year lock-ups, making private equity more appealing to HNWIs who want long-term exposure but with periodic liquidity options.
Recent data highlights just how fast this shift is happening. Between 2018 and 2024, the share of global private equity capital coming from private wealth channels doubled, and forecasts suggest it could hit 20% by 2027.
In simpler terms, more of the world’s private equity funding is coming straight from wealthy families and individuals than ever before.
Easing of Regulations
Another key reason more high-net-worth investors are putting their money into private equity is the changing regulatory environment. For decades, strict rules kept private markets largely off-limits to most individual investors. But over the past few years, regulators have recognized that wealthy individuals want—and should be allowed—more ways to diversify beyond traditional stocks and bonds.
In the U.S., updates from the SEC have broadened the definition of an “accredited investor,” making it easier for professionals with certain credentials or experience to qualify, even if they don’t meet old wealth thresholds. This change alone opened private equity doors to thousands of new investors.
As one senior partner at a top global private equity firm put it, “Regulators are starting to see that sophisticated investors deserve more avenues to grow and protect their wealth.”
Meanwhile in Europe, new frameworks like the ELTIF 2.0 regulations, set to fully roll out by mid-2025, are streamlining how private equity funds can market to and onboard private investors.
These updated rules aim to reduce paperwork, offer more flexible redemption options, and lower barriers so that private wealth can more easily flow into long-term investment projects.
In 2024, private equity funds across Europe raised a record €174 billion, with about 28% of that capital coming directly from private wealth channels, up sharply from 19% just five years ago. This is helping to build a much broader investor base, beyond the traditional pension and insurance giants.
It’s also worth noting how regulators are taking extra steps to protect investors while still encouraging access. Many of the new rules emphasize better transparency, clearer fee disclosures, and improved investor education. This balance is crucial—giving HNWIs more ways to invest in private equity but also ensuring they fully understand the risks and structures involved.
As BlackRock’s Larry Fink commented recently, “Private markets will play an ever-larger role in portfolios, and regulation is evolving to make sure that happens responsibly.”
All in all, it’s easy to see why private equity is becoming such a major focus for high-net-worth investors in 2025. They’re drawn by the promise of higher returns, steadier portfolios, access to exclusive deals, and a proven hedge against inflation—all at a time when public markets look increasingly uncertain.
With new structures making private equity easier to reach, and regulations evolving to support more private wealth participation, this shift looks set to keep building in the years ahead.
For many wealthy investors, private equity isn’t just an alternative anymore—it’s becoming a core part of how they grow and protect their capital for the long run.
