The View From Apollo Private Equity Portfolios: Three Key Dimensions of Diversification
Mar 31, 2026
Bryn Gostin, equity product specialist at Apollo who advises on portfolio construction, manager selection, and sector allocation. He breaks down three key diversification dimensions: manager choice, company size, and sector exposure. Discussion touches on private equity’s evolution, risks from software concentration, and opportunities in distressed debt and hard assets.
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Larger Deals Often Deliver Bigger Operational Gains
- Operational upside in practice is often larger in mega-cap deals because access to top executive talent and resources drives greater margin improvement.
- Bryn cites data showing highest operational margin improvement occurs in mega-cap space.
Underwrite Fundraising And Team Durability
- Underwrite manager enterprise risk, not just current team quality, when investing in smaller funds.
- Bryn warns many middle-market managers struggle to raise follow-on funds and may lose teams over a 7-year dry spell.
Middle Market Means Wider Outcome Dispersion
- Middle-market investing increases return dispersion and volatility; advertised higher average returns reflect top-decile outcomes, not the mean.
- Bryn cautions concentrated portfolios of smaller funds likely end up average with higher risk.