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Private Investments 101

What Does Your Investment Portfolio Look Like?



INVESTING TODAY IS A WHOLE DIFFERENT ACTIVITY FROM A DECADE AGO

One of the quickest ways to lose money is to refuse to accept the notion that markets evolve over time. Achieving the same return in conservative portfolios that existed years ago now requires a material increase in volatility and risk. Previously the domain of 'big boys', private investment opportunities made available through platforms today are breaking the monopoly of the rich by making private equity and VC-type investments accessible to any accredited investor seeking to diversify his portfolio.

The Wall Street Journal published an article in June 2016 that summarises the evolution of investment returns for professionally managed funds over the last 20 years. The chart below illustrates just how dramatic the change has been since 1995.





The picture painted here leads to two important conclusions:

  1. Volatility = Inevitable. Ultra-safe public market products like bonds no longer offer the same attractive returns as they once did before the turn of the century. Riskier asset classes now form a significant part of even institutional portfolios, and any portfolio that seeks similar returns today must remain volatile for the foreseeable future.
  2. It gets harder. Unfortunately, the activity of diversification across multiple asset classes requires deeper levels of analysis and research on the part of the investor. Add to that the burden of constant rebalancing, and it's easy to see why some consciously allow their portfolios to slip into a tepid state of stagnancy.

THE BOTTOM LINE

Those who are driven to earn the same returns pre-2000 need to re-assess their ability to stomach volatility; there's the small issue of expectation vs. reality. When faced with a major swing in value, the pain of paper losses mount to the point that it forces investors to panic-sell, which does one thing only: convert (hopefully) temporary pain to permanent damage. The market will continue to change, and expectations need to shift as well.

A SILVER LINING?

What's the secret sauce behind institutional investor behaviour? How are they quite coming out ahead from the rest of the market? From the perspective of a lay-investor, the market is a frustrating one, and access to professionally managed private equity remains rare... until now. Alongside leading institutions, we're leading an initiative centred around our newfound ability to fundraise for funds, effectively placing you in the driving seat to invest alongside institutional investors. At a significantly lower access point and ticket size, we're working towards helping accredited investors achieve the same returns as leading institutional funds.

Intrigued enough to be part of this movement? Check out the 'Invest' tab on our site.




Explained by:
Justin Chow Co-Founder & CMO

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