As an alternative investment, private equity is not only a low-correlation play but also a risk/reward speculation.

Just as stocks are generally riskier than bonds and deliver higher returns, small-cap stocks typically are riskier than large-caps while historically producing larger gains. On that continuum, private equity is considered riskier than public equity, as private companies may be smaller and less-scrutinized by regulators than public firms, with negotiated rather than market-set pricing.

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