A private equity investment trust is the one form of private equity exposure available to ordinary UK retail investors without any certification requirement: a listed, FCA-regulated closed-end investment company, traded on the London Stock Exchange like any other share, that itself invests in private companies or private equity funds.

What makes a trust different from a direct fund

Direct PE fund (limited partnership)

  • Restricted to certified/professional investors
  • Illiquid for the fund's full term (often ~10 years)
  • Capital called in stages, not paid up front
  • No daily market price

PE investment trust

  • Open to any retail investor, no certification needed
  • Bought and sold daily on the stock exchange
  • Pay the full share price up front, like any share
  • Priced continuously by the market, but can diverge from NAV

The premium and discount to NAV: the concept unique to this structure

A trust's Net Asset Value (NAV) is the estimated value of everything it holds, calculated periodically by the manager. Its share price, however, is set by ordinary buying and selling on the stock exchange, and the two frequently diverge: a trust can trade at a discount (share price below NAV) or a premium (share price above NAV). Since underlying private company holdings are valued periodically rather than continuously, the market's view of a trust's true worth can differ meaningfully from the manager's own valuation, and that gap is itself a source of both opportunity and risk.

Why the discount matters

Buying at a wide discount to NAV can mean effectively acquiring the underlying portfolio for less than its stated value — but a discount can also persist or widen for years, and there is no guarantee it will narrow. Check a trust's current premium/discount and its historical range before assuming either direction.

Other features specific to trusts

  • ISA and SIPP eligible — unlike a direct private equity fund commitment, most PE investment trusts can be held within a Stocks and Shares ISA or a SIPP, which is a genuine practical advantage for UK investors.
  • Gearing — many trusts use borrowing (gearing) to enhance returns, which also amplifies losses; check a trust's gearing policy and current level.
  • Ongoing charges — trusts publish an ongoing charges figure, generally lower and more transparent than direct fund "2 and 20" structures, though management approaches vary between trusts.
  • Diversification — most PE trusts hold stakes across many underlying funds or companies rather than a single deal, spreading manager and company-specific risk more than a direct single-fund commitment would.

What still carries risk

A PE trust is FCA-regulated as a listed vehicle, but that does not mean capital is protected or guaranteed — its share price can fall, the discount to NAV can widen, and the underlying private companies can themselves underperform or fail. It is a regulated route to an inherently illiquid, higher-risk asset class, not a way of removing that risk.

Before investing in a trust

  • Check the trust is listed on the London Stock Exchange and confirm its regulatory status and management company on the FCA Register.
  • Review its current premium/discount to NAV and its typical historical range.
  • Check its gearing level and policy.
  • Look at what the trust actually holds — the number and type of underlying funds or direct company stakes, and how diversified that portfolio really is.

See also Private Equity Investment Funds Explained for how the underlying asset class works, and secondary investments, which some trusts specialise in.

Share prices can fall as well as rise. This is not financial advice; consider speaking to an FCA-authorised adviser before investing.