Does a More Exclusive Investment Mean a Better Investment?

There’s something naturally appealing about having access to something other people don’t.

A reservation that’s hard to get. A members-only club. A product that isn’t available to everyone.

Investing can work the same way.

Private equity, private credit, alternative investments, and other opportunities traditionally reserved for wealthy investors can sound appealing partly because of their exclusivity. If you have to meet certain wealth or income requirements just to participate, it’s easy to assume the investment must offer something better.

But exclusive doesn’t always mean better.

A recent CNBC article, “Private equity funds are losing to the S&P 500 of late—why investments for the wealthy aren’t necessarily better,” highlighted a great example.

According to the article, private equity returned an annualized 7.4% over the three years ending in March 2026, compared with 18.3% for an S&P 500 fund.

Over five years, private equity returned 9.3% annually compared with 12% for the S&P 500.

That doesn’t mean private equity is a bad investment. Over longer periods, private equity has historically produced attractive returns, and there can be legitimate reasons to include private investments in a portfolio.

But it does challenge an idea we think is worth talking about:

More complicated, more expensive, and harder to access doesn’t automatically mean better.

What Are You Actually Getting?

When evaluating any investment, it helps to move past the label and ask what you’re actually getting in return.

Private investments can provide access to companies and opportunities that aren't available in public markets. They can add another layer of diversification and, in some cases, offer attractive long-term return potential.

But there are tradeoffs.

Private investments can be difficult to sell. Your money may be committed for years. Fees can be considerably higher than traditional investments. And depending on the strategy, you may be taking on additional risk.

Those tradeoffs aren't necessarily good or bad. They simply need to be worth it.

If you're giving up liquidity, what are you receiving in return?

If you're paying substantially higher fees, is there a reasonable expectation that the investment can justify those costs?

If you're taking additional risk, does that risk actually improve your overall financial plan?

Those questions matter much more than whether an investment is available only to a select group of people.

Simple Doesn't Mean Unsophisticated

There can sometimes be a perception that once you've accumulated significant wealth, your investments should become increasingly complicated.

We don't think that's necessarily true.

A diversified portfolio of publicly traded investments can be relatively inexpensive, liquid, transparent, and easy to understand. Those aren't shortcomings. In many situations, they're advantages.

The goal isn't to own the most interesting portfolio at the dinner table.

The goal is to own a portfolio that gives you the best chance of accomplishing what you actually want your money to do.

Your Portfolio Doesn't Have to Prove Anything

As your wealth grows, you'll probably be introduced to more investment opportunities.

Some may be worthwhile. Some may provide diversification or access that genuinely improves your portfolio. And some may simply be more expensive and complicated ways of accomplishing something you could have done much more simply.

That's why we believe the starting point shouldn't be:

“What investments can I get access to now?”

Instead, start with:

“What does my financial plan actually need from my investments?”

Do you need growth? Income? Liquidity? Stability? A combination of all four?

Once you know what you're trying to accomplish, it becomes much easier to evaluate whether an investment deserves a place in your portfolio.

Sometimes the more sophisticated decision isn't adding another investment. It's recognizing when you don't need one.

There’s nothing wrong with private investments, alternative strategies, or opportunities that aren't available to everyone. They can absolutely have a place when they serve a purpose within someone's larger financial plan.

But exclusivity alone isn't a reason to invest, neither is complexity.

Your portfolio needs to work for you, your goals, and the life you're trying to build.

Because when it comes to investing, more isn't always better—and neither is more complicated.

Process over predictions.

Shean

Inspired in part by CNBC's September 2, 2026 article, “Private equity funds are losing to the S&P 500 of late—why investments for the wealthy aren’t necessarily better,” by Ryan Ermey.