Private equity returns are likely to continue outperforming public markets even as access widens to retail investors, according to senior executives at Carlyle. Carlyle Chairman David Rubenstein said that regulators are moving to open private equity funds to a broader investor base, including individual investors in the U.S., within the next one to two years. While the inflow of new capital could narrow performance gaps, Carlyle expects private market returns to remain up to 400 basis points higher than those of public equities. Historical patterns suggest that concerns over excess capital reducing returns have repeatedly failed to materialize as new investor groups entered the asset class.
Rubenstein stated, “For the last 50 years, every time a new set of investors came along — public pension funds, sovereign wealth funds, global pension funds, private family offices, high-net worth individuals — people said it’s too much capital, and the rates of return will come down, and almost every time they’ve been wrong.” Although broader participation may increase competition and compress margins over time, private markets continue to benefit from longer investment horizons and active ownership models.
