Public Offering of Fund's products are large in scale, which can generally raise and manage hundreds of millions to tens of billions of funds, while the scale of private equity funds is generally smaller than that of Public Offering of Fund, which can raise and manage tens of millions to billions of funds. However, Public Offering of Fund has more restrictions on holding shares and positions than private equity funds, and it is not as flexible as private equity funds, so it can invest in more varieties. Private equity funds have fewer investment restrictions, but the liquidity of funds is poor. Private equity funds can only be redeemed on public open days, and there are many redemption restrictions. Most of the publicly issued funds can be redeemed at any time.
Let's compare the average performance of Public Offering of Fund and private equity funds in recent ten years. According to the data from 2007 to 2020, the annualized rate of return of Public Offering of Fund stock index is 10.3%, and that of private equity index is 8.63%. Therefore, from the average annualized rate of return, Public Offering of Fund is more profitable, which quickly overturns the view that private equity funds are more profitable than Public Offering of Fund. However, from the perspective of maximum withdrawal and volatility, the risk control of private equity funds is better than that of public equity funds. We need to compare the final Sharp ratio, that is, the return that investors get by taking unit risks. The unit risk return of private equity funds is more, so private equity funds can make the same amount of money, which can control the risk lower and have a better investment experience.
Under the bull market, Public Offering of Fund's increase was generally faster than that of private equity funds, but after the bull market passed, Public Offering of Fund's decline was greater than that of private equity funds under the market crash. Of course, here is the overall comparison of all private placements and public offerings, and the comparison is the average level of funds in the market. Finally, look at the difference between public offering and private offering from the fund's assessment system and income source. Public Offering of Fund's source of income is the fixed management fee of the fund. In the most extreme case, if the fund returns are negative in that year, as long as the fund ranks high, the fund manager can still get rich bonuses. But the private incentive fund is completely different. The management team of private placement is advancing and retreating with investors, and private placement funds must continue to make money for investors in order to make profits.
Many small partners who think that private equity funds make more money than Public Offering of Fund may only see the halo on the top of private equity funds. If we only look at the overall average annualized income of funds in three years, five years and ten years, Public Offering of Fund is more dominant, but private equity funds are often on the list of the most profitable funds in a year, and they can still rank in the forefront. So private equity funds make more money than Public Offering of Fund? There is no answer to this question. As long as you choose excellent funds and buy them at the right time, you can make money.