BMO Private Equity Trust (BPET) offers investors a distinctive approach to accessing private equity, in that it invests with managers at a relatively early stage in their development. BPET’s manager believes this means being exposed to more motivated teams and to lower mid-market deals where BMO are more likely to be offered co-investment opportunities. The team aim to manage risks by deliberately diversifying across a wide range of underlying companies, funds and managers. Private equity has delivered handsome returns to investors over the years. In its most recent financial year ending 31 December 2020, BPET extended its run of strong performance relative to listed equity markets by generating a NAV total return of 22.7%. This compares with negative returns for the FTSE All-Share and the Numis Smaller Companies indices. BPET’s managers observe that no company was immune to the effect of the pandemic, but the resilience displayed by the portfolio is reflective of the unique advantages that private equity-backed businesses have. Managers and investors are highly aligned in private equity deals, but the additional sector and financing expertise brought to bear during the pandemic from PE managers meant that many worst-case scenarios were avoided. This meant that companies have been in a good position to benefit from the resurgence in deal activity that occurred in Q4 2020. Dotmatics, a portfolio company recently sold at 8.7x invested capital, illustrates the significant value creation that is achievable through private equity. BPET offers investors a simple way to get diversified exposure to co-investment opportunities such as these. We expect the level of co-investments to remain between a third and a half of NAV, reflecting a rise in the number of opportunities that BPET’s managers have observed in this area over the years.