The amount of value being created before companies go public has grown substantially over the past couple of decades, making private markets increasingly difficult to ignore.

But private equity isn't like buying an S&P 500 ETF. Manager selection and portfolio construction matter much more.

A few things I'd pay attention to:

Vintage diversification - commit capital across multiple years instead of trying to time one fund vintage.

Strategy diversification - consider exposure across buyout, growth equity, venture capital, secondaries, hybrid strategies, and life sciences rather than concentrating in a single area.

Tax efficiency - unlike broad equity ETFs, private equity funds regularly realize gains as portfolio companies are sold. Holding private equity in retirement accounts (or pairing it with tax-loss harvesting strategies when appropriate) may improve after-tax outcomes.

Sourcing - this is one of the biggest differentiators. Access to proprietary or less competitive opportunities can have a meaningful impact on long-term results.

Private equity can be an excellent complement to a diversified portfolio, but you want to make sure you do it the right way.