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The role of venture capital in an institutional portfolio

Private equity investment is not for the faint hearted, says Nick Fitzpatrick of Bacon & Woodrow. New investors, must note that, while the asset class offers both diversification and promises high returns, it is also weighed down by poor valuation mechanisms and illiquidity. Investors must be prepared to wait over five years for meaningful performance figures and good returns on investment.

The decision as to which private equity fund you invest in is more important than a decision as to whether or not you should invest in the asset class at all - the exact opposite conclusion than one reaches for quoted equities. It is also imperative to diversify across funds.

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Bacon & Woodrow is a partnership of actuaries and consultants, with 1,000 partners and staff. They specialise in helping clients resolve strategic issues and solve financial problems, especially those requiring the modelling of assets, liabilities and risks. Their fields of consulting expertise are occupational pensions and employee benefits, the development of institutional investment strategy, and total reward management. For more information please visit www.bacon-woodrow.com