Insightful Investor · Nov 3, 2026 · 31m · 24m saved
With Rich Powers, Head of Private Equity Product Management at Vanguard
Photo via Vanguard
The gap between the best and worst private equity managers is about 5,000 basis points, against about 700 in public stocks, Rich Powers, Head of Private Equity Product Management at Vanguard, told Alex Shahidi on Insightful Investor. Much of the industry sells private equity as an asset class to own. Rich said owning it without picking the right manager is not a realistic plan.
"If you look at the top performing managers and the bottom performing managers, the difference in returns is something like 5,000 basis points. You did that same study for public equity, the difference is more like 700 basis points." — Rich Powers
Rich ran Vanguard's ETF product team from 2015 and took over its newly created private equity team in late 2021, a year after the firm's first private-market product launched. He is applying the index-fund company's low-cost approach to the most expensive corner of investing.
The full interview is covered here so you can skip it. 31 minutes of audio, 7 minutes of reading.
Here are the 7 insights that matter.
Key Takeaways
Private companies now hold about 10% of global equity market value, up from about 1% twenty years ago
Manager selection matters far more in private equity than in public stocks
The top-to-bottom quartile gap is about 5,000bps, against about 700bps in public equity
Leverage drove half of private-market returns from the 1980s to the early 2000s and about a quarter since
Illiquidity is mostly a feature, because it stops investors from selling in a panic
Private credit is not a substitute for Treasuries, and a few loose underwriters could hurt the whole segment
Rich expects the line between public and private holdings to fade within ten years
1. Learning From Tech's Crash
Rich started his career in the late 1990s and put his own money into the large-cap growth funds that were rising fastest. The tech sell-off that followed taught him what he says still guides his work.
Rich Powers learned diversification by losing money in growth funds before the tech sell-off
"The benefits of diversification, allocating assets across a variety of different styles... and the importance of valuation and discipline there." — Rich Powers
He said none of his later moves were his own plan. Vanguard asked him in 2015 to lead its ETF product team, although his background was in active, value-oriented management. In late 2021 it moved him to the private equity team.
