Listed private equity has long been treated as a museum piece, a product from another era, illiquid at the wrong moments and overshadowed by the private capital boom.

But in a market wrestling with access, governance and liquidity, investment trusts may be holding on to an advantage the rest of the ecosystem quietly misses.

That, at least, was the case made in the fireside conversation between Pantheon International chair John Singer and Susannah Nicklin, experienced chair and director of listed private asset trusts. The starting point of his argument is that private equity’s returns are not evenly distributed, and never have been. “If you are invested in the first quartile and second quartile for the last 40 years, you should be beating the market”.

This is where Singer locates a major justification for the investment trust model where managers have built up long-term relationships with leading GP’s. Most individuals, and many institutions, cannot build a diversified portfolio of top-quartile managers on their own. But they can buy one share of a listed vehicle that provides access to these managers and a best-practice process of value-added portfolio management.. The rationale is not retail “democratisation,” on its own, which has become a fashionable slogan, but the more grounded recognition that almost all other private equity vehicles require the deep pockets of institutions or high net worth individuals. Investment trusts can be bought by any retail investor without requiring eligibility credentials, and are ideal – arguably essential – allocations for any long term portfolio. 

Singer’s argument is in most part institutional. He insists the strength of the model is the board, not as a formality, but as a highly challenging layer between capital and managers. An investment trust, he said, “isn’t a passive tracker” and “isn’t a funnel” sending public money into private funds without scrutiny. The point is the independence. The board can challenge strategy, reject managers and tighten portfolio construction in a way wealth-platform semi-liquids rarely attempt.

Singer has put this philosophy into practice. “In the three years that I have become chair, I have five new members of a multi-skilled board, all with very strong, lifelong private sector experiences,” he said, adding that the purpose is “to really challenge the manager and really work out what’s going on”. In other words: governance as a competitive tool that drives outperformance.

This matters because private equity itself has changed. Holding periods have doubled. “For most of my career, they were three years – now six and a half years,” Singer said. Financial engineering is less forgiving, and the firms that cannot deliver operational earnings growth find themselves exposed. The trust structure, unusually, gives shareholders a group of board members tasked explicitly with spotting those gaps, and correcting them, before capital is committed.

The comparison with semi-liquid vehicles prompted Singer’ interviewer, Susannah Nicklin to point out that some providers “religiously avoid using the term semi-liquid,” preferring not to link the word “liquid” to private equity at all. She said the mechanics speak for themselves: controlled redemptions, quarterly windows, and gates that only become visible when markets strain. Mechanics not yet fully tested in downturns. Investment trusts, by contrast, allow investors to buy and sell freely, albeit with pricing subject to volatile discounts that are often unrelated to the performance of the assets.

Singer acknowledges the issue and has taken market-leading action to reduce the discount. Pantheon International’s discount has narrowed from “50% plus to 29%,”  and under his leadership the PIN board has embarked on strategies to bring this down further.  This is an important reaction to investor concerns and several peer boards have followed PIN’s example. But it’s also critical to focus on the extraordinary NAV return that shareholders entering and exiting at similar discounts have experienced,. That return – at Pantheon’s reported 12% per annum over nearly four decades – is what compounding actually looks like.

The real question, however, is perhaps not about past performance or discounts. It is about relevance. In a market saturated with new wrappers for private markets (evergreen funds, ELTIFs, semi-liquids), what purpose does a listed trust serve?

Singer’s closing analogy, prompted by Nicklin, was strikingly self-aware. A good portfolio is “a beautiful painting,” she said. Singer expanded it: the painting is made coherent by its frame. It is this framework that guides long-term allocation decisions. His claim is that investment trusts have that framework in the form of a North Star and corporate strategy, or at least, the best ones do, and that the market has underestimated the strategic relevance of that governance layer.

The private equity industry has had to deal with a prolonged period of slower exits, longer holds and increased competition. In that environment, the old argument against investment trusts, namely that they are relics of a pre-capital-supercycle age, appears thinner. Their board structure, their ability to pivot strategy, and their role as aggregation vehicles for closed-door GPs could become more, not less, valuable.

If the industry is reshaping itself around long-term discipline, the structures that enforce discipline at the shareholder level may turn out to matter more than anyone expected.

by Andreea Melinti

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