1. Attractive risk/return profile: historically, private equity has delivered an excess return of 3% to 4% per annum over the public market during the past 25 years. This outperformance can largely be explained by so-called liquidity premiums. As investors commit their capital for an extended period, they are compensated with a yield premium. Depending on the asset class in question, this illiquidity premium can amount to 3% to 5%.
    
2. Diversification benefits: another important benefit of private market investments is their ability to enhance portfolio diversification. Typically, private market investments exhibit a low level of correlation to traditional investments like equities or bonds, and thus reduce the overall portfolio risk. Furthermore, private market investments follow different valuation cycles and therefore are less sensitive to short-term market fluctuations. This can have a stabilising effect, especially during periods of heightened volatility on the public markets. This means that adding selected private market investments can reduce fluctuations within the portfolio.
    
3. Unique investment opportunities: private market investments provide access to investment opportunities that are unavailable on the public market. Examples here include innovative technology companies, niche market leaders in specialised sectors and infrastructure projects. Today, almost 90% of all companies with an annual turnover in excess of USD 100 million are private. The number of IPOs has fallen dramatically in recent years and in times when companies are tending to go public later or not at all, the private market offers investors the chance to participate in their value creation.

• Illiquidity:investors must be prepared to commit their capital for extended periods, typically over a timeframe of 10 to 12 years. Early exits are often not possible or go hand in hand with discounts on secondary markets.
   
• High barriers to entry:many private market investments usually require high minimum investment amounts of CHF 5 million for private investors and CHF 10 million for institutional investors, which can prove prohibitive.
   
• Complexity: private market investments necessitate specialised expertise in the areas of due diligence, valuation, risk analysis and cash flow management.
   
• Selection: choosing the right fund and the right fund manager is crucial, as the differences in performance between the top-performing and the worst-performing managers can be significant.

With the democratisation of the private markets, regulatory developments and the introduction of new product structures, including so-called evergreen or semi-liquid funds, the challenges facing private investors have diminished. This has made the asset class accessible to a broader investor base. Evergreen structures allow investors to invest 100% in a broadly diversified portfolio from day 1 without the need for years of capital calls. What is more, there is also a certain predefined partial liquidity. When implementing private market investments in a portfolio, investors should ensure broad diversification across various strategies, regions and vintages with a view to spreading the risk. Through our extensive network and experience in the private market, we provide our clients with access to a globally diversified portfolio comprising top-tier private market managers.

Our advisory team would be happy to assist you in person. You can reach us via e-mail or by calling +41 44 286 25 25.

_{This publication is intended for information and marketing purposes only, and is not geared to the conclusion of a contract. It only contains the market and investment commentaries of Maerki Baumann & Co. AG and an assessment of selected financial instruments. Consequently, this publication does not constitute investment advice or a specific individual investment recommendation, and is not an offer for the purchase or sale of investment instruments. The future performance of investments cannot be inferred from past price performance. In other words, the value of investments may increase but may also decrease, and the investor may be required to make additional payments for certain products. In certain circumstances, figures may refer to reporting periods of less than five years, which could reduce their validity. Predictions for the future are always non-binding assumptions. Figures presented in foreign currencies are also subject to exchange rate fluctuations, which can affect their performance. The information in this publication is in no way to be understood as an assurance of future performance. Maerki Baumann & Co. AG does not provide legal or tax advice. In addition, Maerki Baumann & Co. AG accepts no liability whatsoever for the content of this document; in particular, it does not accept any liability for losses of any kind, whether direct, indirect or incidental, which may be incurred as a result of using the information contained in this document and/or arising from the risks inherent in the financial markets.}

_{*Please note that due to German regulatory requirements we are unable to provide the crypto service (Crypto focus module) named in this brochure to our clients domiciled in Germany.}

Editorial deadline: 6 February 2025

Maerki Baumann & Co. AG
Dreikönigstrasse 6, CH-8002 Zurich
T +41 44 286 25 25, info@maerki-baumann.ch
www.maerki-baumann.ch