Investing term

What is Private equity (PE)?

Investment in companies that are not listed on public stock exchanges — typically through a fund that buys, restructures, and sells private businesses.

Private equity (PE) is investing in companies that aren't listed on public exchanges, usually through a fund that buys businesses, reshapes them, and sells them years later for a profit. It promises high returns but locks up your money for years, charges steep fees, and is generally restricted to wealthy and institutional investors. It's the private-market cousin of buying public stocks.

For example

A PE fund buys a struggling manufacturer, cuts costs and refocuses it over five years, then sells it for far more than it paid — if the plan works.

Private equity (PE) is taught hands-on in Stage 19 — Beyond Stocks.

See the lesson →

Related terms

ASMLDutch semiconductor-equipment company that makes the EUV lithography machines every advanced chip is manufactured on — a global monopoly with no US peer.Bond ladderA portfolio of bonds with staggered maturities — one matures every year (or every few years) so cash continuously becomes available.CryptocurrencyDigital assets recorded on a blockchain — Bitcoin, Ethereum, etc. Highly volatile and not backed by cash flows or governments.Currency hedgingAn overlay used by some international ETFs to remove the effect of currency moves, so you get the foreign stock return in your home currency.
← Back to the full glossary