How Has Private Equity Investing Fared for Mutual Funds?

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I first learnt about mutual funds actually invest in private firms through the WeWork book. The book painted the mutual funds falling head over heels to invest in WeWork and of course it didn't turn out too well.

But if the asset allocation was done correctly, it does seems like private equity investing is still considerably a very profitable class. At least it opens up access to private firms for the average man on the street.

How Has Private Equity Investing Fared for Mutual Funds?

T. Rowe Price’s small- and mid-cap funds, particularly T. Rowe Price New Horizons (PRNHX), were among the first to invest in private-firm equities. The firm's overall private-firm equity stake in its mutual funds rose to a peak of nearly $12 billion in late 2021 from $872 million at the end of 2011 before falling to $5.2 billion as of June 2022, mostly because of Rivian Automotive (RIVN) going public in November 2021.

As Fidelity and T. Rowe Price ramped up their activity in private markets, several firms pulled back. Wellington, which subadvises several Hartford and Vanguard mutual funds, stopped investing in new private-firm equity opportunities in open-end mutual funds by the late 2010s. Meanwhile, Morgan Stanley Investment Management got more selective after some illiquid private-firm equity positions got too big in its small- and mid-cap funds because of outflows.

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