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Whitaker-Myers Wealth Managers is an SEC-registered investment adviser firm. The information presented is for educational purposes only and intended for a broad audience. The information does not intend to make an offer or solicitation to sell or purchase any specific securities, investments, or investment strategies. Investments involve risk and are not guaranteed. Whitaker-Myers Wealth Managers reasonably believes that this marketing does not include any false or misleading statements or omissions of facts regarding services, investment, or client experience. Whitaker-Myers Wealth Managers has a reasonable belief that the content will not cause an untrue or misleading implication regarding the adviser’s services, investments, or client experiences. Please refer to the firm’s ADV Part 2A for material risks disclosures.

Past performance of specific investment advice should not be relied upon without knowledge of certain circumstances of market events, the nature and timing of the investments, and relevant constraints of the investment. Whitaker-Myers Wealth Managers has presented information in a fair and balanced manner.

Copyright (c) 2023 Clearnomics, Inc. and Whitaker-Myers Wealth Managers, LTD. All rights reserved. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness, or correctness of the information and opinions contained herein. The views and the other information provided are subject to change without notice. All reports posted on or via www.clearnomics.com or any affiliated websites, applications, or services are issued without regard to the specific investment objectives, financial situation, or particular needs of any specific recipient and are not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Past performance is not necessarily a guide to future results. Company fundamentals and earnings may be mentioned occasionally, but should not be construed as a recommendation to buy, sell, or hold the company's stock. Predictions, forecasts, and estimates for any and all markets should not be construed as recommendations to buy, sell, or hold any security--including mutual funds, futures contracts, and exchange traded funds, or any similar instruments. The text, images, and other materials contained or displayed in this report are proprietary to Clearnomics, Inc. and constitute valuable intellectual property. All unauthorized reproduction or other use of material from Clearnomics, Inc. shall be deemed willful infringement(s) of this copyright and other proprietary and intellectual property rights, including but not limited to, rights of privacy. Clearnomics, Inc. expressly reserves all rights in connection with its intellectual property, including without limitation the right to block the transfer of its products and services and/or to track usage thereof, through electronic tracking technology, and all other lawful means, now known or hereafter devised. Clearnomics, Inc. reserves the right, without further notice, to pursue to the fullest extent allowed by the law any and all criminal and civil remedies for the violation of its rights.

  • Writer's pictureSummit Puri

Alternative Investments – Private Equity

Once again, we delve deeper into the world of alternative investments. This large class of investments has many unique characteristics that can further diversify your portfolio and provide the sought-after alpha potential. We’ve explored REITs and Structured notes in previous articles. If you’d like to read about those products, here are direct links to take you there:

 

 

In this post, we’ll explore the private equity capital market.

 

The potential is great

Private equity investments involve aggregating capital from investors to acquire equity ownership in private companies. Fun fact: more than 85% of companies valued at and above $250M are NOT publicly traded. This means that public market investors only have access to 15% of the whole market; there is a great opportunity out there! Private equity investments are typically made by private equity firms, which manage funds from institutional investors, high-net-worth individuals, and sometimes retail investors.

 

Let’s take a look at it in more detail

Private equity investments can include startups, mid-sized firms, or large private companies looking to expand, restructure, or go private from public markets. Usually, these companies are looking to raise capital for expansion, growth (M&A), innovation, and, in some cases, to navigate distress situations.

 

This is why finding a manager or financial advisor who knows what companies are being invested in and why is essential. Our team at Whitaker-Myers Wealth Managers conducts the necessary research and due diligence so you, as the investor, do not need to. Having the right guardrails and boundaries can be a significant game changer in the private market.

 

Private equity investors often take an active role in managing the companies they invest in. This can include strategic guidance, operational improvements, financial restructuring, and other forms of hands-on management to increase the company's value. With this type of support and due diligence (when selecting the right company to invest with), private equity investments have often outperformed the S&P 500.

 

Pros of Private Equity Investments

Potential for higher returns

  • With access to a wide range of investments and active management by the investing organizations.


Diversification benefits


Aggregation of funds

  • Allows for investment opportunities for those who are typically unable to.

 

 Cons to Private Equity Investments

Increased risk

  • Investing in startups or small/mid-cap businesses has inherent risks; compared to investing in the S&P500 index, it has increased risk.


May have high minimum requirements

  • Including net worth, investment capital, and income.


Illiquidity or semi-liquidity

  • Some funds may have redemption limitations and have minimum investment time horizons. Some may apply a ‘haircut’ on the investment if taken out before (usually around 2%).


Fees

  • Including some frontend, backend, and management fees.


Transparency

  • This is becoming less of a concern as most information is available on the investment company’s website and their fact sheets.


Complexity

  • Investing in private equity isn’t as easy as the public market and certainly has a learning and investing curve.

 

How do I know if Private Equities are for me?

The best answer here is to discuss it with your financial advisor. Our team at Whitaker-Myers Wealth Managers is always ready to field your questions and guide you with the heart of a teacher.  

 

Private equity investments play a crucial role in the financial ecosystem by providing capital and expertise to private companies and fostering innovation, growth, and economic development. While they offer the potential for high returns, they come with significant risks and require a long-term commitment. As mentioned earlier, there certainly is an opportunity with private equity investing, but discuss it with your advisor to see if it is a good fit for you.

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Whitaker-Myers Wealth Managers is an SEC-registered investment adviser firm. The information presented is for educational purposes only and intended for a broad audience. The information does not intend to make an offer or solicitation to sell or purchase any specific securities, investments, or investment strategies. Investments involve risk and are not guaranteed. Whitaker-Myers Wealth Managers reasonably believes that this marketing does not include any false or misleading statements or omissions of facts regarding services, investment, or client experience. Whitaker-Myers Wealth Managers has a reasonable belief that the content will not cause an untrue or misleading implication regarding the adviser’s services, investments, or client experiences. Please refer to the firm’s ADV Part 2A for material risks disclosures.

Past performance of specific investment advice should not be relied upon without knowledge of certain circumstances of market events, the nature and timing of the investments, and relevant constraints of the investment. Whitaker-Myers Wealth Managers has presented information in a fair and balanced manner.

Copyright (c) 2023 Clearnomics, Inc. and Whitaker-Myers Wealth Managers, LTD. All rights reserved. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness, or correctness of the information and opinions contained herein. The views and the other information provided are subject to change without notice. All reports posted on or via www.clearnomics.com or any affiliated websites, applications, or services are issued without regard to the specific investment objectives, financial situation, or particular needs of any specific recipient and are not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Past performance is not necessarily a guide to future results. Company fundamentals and earnings may be mentioned occasionally, but should not be construed as a recommendation to buy, sell, or hold the company's stock. Predictions, forecasts, and estimates for any and all markets should not be construed as recommendations to buy, sell, or hold any security--including mutual funds, futures contracts, and exchange traded funds, or any similar instruments. The text, images, and other materials contained or displayed in this report are proprietary to Clearnomics, Inc. and constitute valuable intellectual property. All unauthorized reproduction or other use of material from Clearnomics, Inc. shall be deemed willful infringement(s) of this copyright and other proprietary and intellectual property rights, including but not limited to, rights of privacy. Clearnomics, Inc. expressly reserves all rights in connection with its intellectual property, including without limitation the right to block the transfer of its products and services and/or to track usage thereof, through electronic tracking technology, and all other lawful means, now known or hereafter devised. Clearnomics, Inc. reserves the right, without further notice, to pursue to the fullest extent allowed by the law any and all criminal and civil remedies for the violation of its rights.

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