New to private assets?
An allocation to private assets can deliver attractive returns and access to a broader opportunity set. Our introductory video explains what they are and how they differ from traditional investments.
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Video transcript
Many investments are listed on a public exchange and can be easily bought and sold. But private assets are different. These investments, which include areas like private equity, venture capital and renewable energy, are not listed on an exchange. They may be illiquid and require you to commit your capital for years.
However, some private asset managers have been able to achieve very attractive long-term returns.
Here, we show 10-year return data for private equity managers. In both the US and Europe, managers have, in aggregate, delivered higher returns than public markets. The best-performing managers have achieved returns that are considerably higher.
Traditionally, private markets have been dominated by institutional investors, such as pension funds and sovereign wealth funds. These investors can commit capital for the long term and have been able to meet the high minimum investment levels required by some private asset managers.
Things are changing, however. It is now far easier for individuals to invest in private assets. They won’t be suitable for everyone but, where they are, we can help you to construct a diversified private asset portfolio.
Cazenove Capital is part of Schroders, one of Europe’s largest asset managers. We invest directly in private markets and also have long-standing relationships with many of the world’s most successful private asset managers, allowing us to access attractive opportunities on favourable terms.
Everyone likes to shop where there’s more choice – and it’s the same for investors. A big part of the appeal of private assets is that they offer a much broader opportunity set than public markets. Take the US corporate sector as an example. Only 15% of American companies with revenues of $100 million or more are publicly listed. Incredibly, 85% of them are privately owned, according to data from private equity group Hamilton Lane.
In fact, many well-known companies – such as Facebook and AirBnB – saw the biggest increases in value before they were listed, creating huge returns for their early, private market backers.
Fishing in a bigger pond gives private mangers the opportunity for managers to find lesser-known opportunities and negotiate on price. And once an investment has been made, private market managers often have a seat at the decision-making table.
For individual investors, it takes time to build up a diversified portfolio of private assets. Typically, our clients will work with a portfolio manager to invest in a blend of investment styles and asset classes in a systematic manner over a number of years. As early investments are exited, they can be re-invested in new opportunities.
It is important to remember that private assets are illiquid and you may need to tie up your money for years. These investments also come with more risk than public markets. Your portfolio manager will build a thorough understanding of your circumstances and objectives to assess whether they are suitable for you.
To find out more and get in touch, please visit Private assets
Private Assets - Investment risk: Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested. Investors should only invest in private assets (and other illiquid and high risk assets) if they are prepared and have the ability to sustain a total loss of their investment. No representation has been or can be made as to the future performance of these investments. Whilst investment in private assets can offer the potential of higher than average returns, it also involves a corresponding higher degree of risk and is only considered appropriate for sophisticated investors who can understand, evaluate and afford to take that risk. Private Assets are more illiquid than other types of investments. Any secondary market tends to be very limited. Investors may well not be able to realise their investment prior to the relevant exit dates.
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This article is issued by Cazenove Capital which is part of the Schroders Group and a trading name of Schroder & Co. Limited, 1 London Wall Place, London EC2Y 5AU. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
Nothing in this document should be deemed to constitute the provision of financial, investment or other professional advice in any way. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested.
This document may include forward-looking statements that are based upon our current opinions, expectations and projections. We undertake no obligation to update or revise any forward-looking statements. Actual results could differ materially from those anticipated in the forward-looking statements.
All data contained within this document is sourced from Cazenove Capital unless otherwise stated.
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