 Data: Preqin Pro; Chart: Erin Davis/Axios Visuals Trading stocks has gotten cheaper and easier in recent years — now something similar is happening in the once exclusive world of private equity, Axios' Kate Marino writes. Why it matters: A majority of U.S. companies are private — and about a third of the benchmark S&P 500 index often consists of just 10 companies. Meanwhile, private equity assets under management have more than tripled since 2010 — putting even more midsize and growth companies outside the reach of public investors. - Some PE firms rack up returns far in excess of the S&P, though the performance of the industry as a whole is hotly debated.
- The collapse of the traditional 60/40 portfolio this year has amplified the mainstream appeal of alternative assets, says Joan Solotar, who runs Blackstone's private wealth solutions business.
How it works: Private equity firms raise capital from institutions like pension funds and endowments, pool it together and buy companies — often purchasing them out of the hands of public shareholders. - These firms usually aim to sell those companies at a profit a few years down the road and distribute the original money (plus gains) to investors.
The big picture: For most of private capital managers' history, their fundraising from individuals was focused on ultra-high net worth types who could write $15 million-plus checks at a time. - That's now shifting in a big way, Jason Singer, partner and head of product innovation at Apollo Management, tells Axios.
State of play: Apollo manages a host of alternative assets, which includes private equity. It recently built out a team that helps serve individual investors — and that team has gone from a single-digit headcount to nearly 150 people in just the last year or so, he says. By the numbers: Apollo raised an average of $1 billion annually from individual investors in 2018-2020 — and expects to lift that amount to around $15 billion per year through 2026. - Meanwhile, at Blackstone, retail investors in 2018 represented $58 billion in assets under management, for 13% of total AUM. They're now $233 billion, and a 25% share.
These retail efforts so far have largely focused on real estate and credit strategies that have regular dividends or income streams. - KKR has taken a similar approach — and sees it expanding. On its earnings call earlier this month, IR head Craig Larson said this about the firm's "democratized" products: "It feels to us like there's real interest in expanding those opportunities into additional asset classes like [infrastructure] and PE."
The bottom line: "Even recently, we thought private equity reaching individual investors more broadly was a five to 10 year out trend," says Brenda Rainey, executive VP of Bain & Co.'s global private equity practice. "Based on the recent announcements of some of the large publicly traded firms, this could be in the next two years." | 
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