Private equity and private funds more generally have become a go-to investing spot. And not just for institutional and sophisticated investors, or the so-called “smart money.” The retail crowd is also getting into the game. Regulators, too, recognize the risk diversification and return enhancements these instruments can bring to investment portfolios.

Still, while private equity’s appeal may be obvious, its potential benefits intuitive, measuring and explaining private equity performance is an ongoing challenge. As the asset class is increasingly integrated into portfolios, the ambiguity and complexity of current performance standards will be felt more intensely by the market and improvements to those standards will be framed by new regulatory activity.

So why do the current private performance standards have benchmarking limitations and what might a potential solution look like?

Continue reading on the Enterprising Investor Blog of the CFA Institute where this post was originally published.