Private equity funds are typically expected to have a 10-12-year duration, with the possibility of extensions to 16 years or more for some assets in the fund. This places private equity squarely in the long-term horizon category.  Within this overall time horizon, however, there are different stages of a private equity fund that offer periods of partial liquidity for investors through distributions they may receive during the harvesting period and through capital calls, which stretch out over the initial investment period as illustrated below. Time horizons in private equity will also vary by the type of investment strategy being implemented, the general partner’s approach, and market conditions. A buyout fund, for example, may already have its target company identified when initiating the fund, thus shortening the potential horizon, while a venture capital fund may require additional years to identify all the targets that meet the GPs criteria. Also, a Secondary Fund that purchases private assets from other funds could have a time horizon as short as 7 years or so. The initial Investment Agreement between the limited partners and the GP should offer guidance on what type of time horizon investors should expect. The longer-term time horizons associated with private equity are also characterised by periods of illiquidity. This illiquidity is pervasive across private equity investments due to the absence of a formal secondary market for private company shares; however, as shown in the chart below, this illiquidity has allowed private equity managers to pursue investment strategies that have historically resulted in higher returns. Thus, while liquidity is desirable, investors generally pay for it with lower overall returns. In addition, the longer time horizons associated with private equity funds can hold other advantages for investors, such as increased portfolio diversification and risk mitigation. Private equity investors are also able to gain exposure to the innovative opportunities associated with venture capital and the value-added strategies associated with buyouts – strategies that are generally not available to public equity investors.