Athena Ole, Head of Private Funds at Nasdaq Private Market
Well, we know that private equity (PE) has certainly been the shining star of Alternative Investments fundraising over the past several years…and maybe you didn’t go all-in on it from the get-go. This series kicks off as a great way to either build or reinforce reasons why PE can be an appropriate investment for High Net Worth Clients. It then does a deep dive on the various different product structures that have evolved through the past 10 years in this space. Finally, Bob brings it all home with the asset allocation session…how to put it to work and the importance of diversification.
The icing on the cake here is that anyone who knows Bob Rice knows that there are few better ways to stay engaged and focused than with the succinct and energetic presentation skills of this former lawyer and entrepreneur…you will feel like you’re getting a one-on-one session on everything you ever needed to know about private equity.
Here's a quick synopsis of the sessions:
- Why PE?
The first of this webinar series is all about common sense ways to communicate with your clients about private investments. Why should private equity work for them? High net worth clients want and need this type of product, and they can’t do it with a robo-advisor. Bob lays out a goals oriented way to show the roles asset classes have in a portfolio: Income Generation, Risk Reduction, Return Enhancement, and Purchase Power protection. Under that, he highlights the vehicles that help you achieve those goals. He stresses that these goals are most sufficiently accessed through illiquid investments. The big question is why? Why does private equity outperform? A big answer is “active alpha” – they create value at the position level, through control of the asset. Also, the IPO market is not the same in a digital economy anymore. Between 2009 and 2018, unicorns went from $35bn to $700bn…companies have less incentive to go public, so those opportunities stay in the private sector. This disruption by the digital revolution makes it hard for the public markets to play out as many opportunities. The world is infinitely larger in the private space. Once you get through why to invest in private equity, Bob also educates on PE 101 concepts like vintage years investing, capital calls, the j curve, and what else clients can expect from this experience.
- The Productization-Revolution
This is the gem of the bunch. What a wealth of info on Private Equity product structures and wrappers. In this webcast, Bob lays the groundwork for the session by clarifying investment product terminology. For example, a “RIC” means more than one thing… it doesn’t mean 1099 tax reporting if you’re referring to Registered Investment Companies. And not all ‘40 Act funds have daily liquidity. The evolution of PE structures are also reviewed. Everything from Feeder Funds to Interval Funds, with a focus on Auction Funds, the latest registered PE product that brings actual liquidity to the table through Nasdaq Private Market. If you’re a product exec at an asset management shop, a Financial Advisor or RIA, or an investor looking to get allocated to PE, this is a deep dive worth your time. There is more than one way to access PE, and it is not an investment category limited to long term horizons of endowment funds only.
- Solving for Illiquidity in Client Portfolios: How Asset Allocation & Secondary Markets Play a Role
This final session takes your PE investment and structure knowledge and puts it to work via the power of portfolios. Why and how do you create a client portfolio with private equity? He uses allocation-to-credit as a case study on importance of diversification, and stresses that leveraged loans are not the only answer for credit allocation. He outlines a broader spread of credit categories, many which fall in the private sector, which can diversify your credit portfolio. Categories like Specialized Asset-Based Lending (transportation, infrastructure), Risk Transfer strategies (CLO equity, life settlements), and Intangible Assets (healthcare royalties, etc.). Bob reviews fee budgeting and how that shows an Advisor’s value add, and breaks it down by sub-category of PE. Find your private market fee structures explained here: waterfalls, clawbacks, catchups - and all the ways that private managers have long term skin in the game.
If you haven’t invested in PE before, or if you have but your exposure has been limited to individual product pitches, this series will help you feel comfortable with a top down approach for systematic, strategic investing in this space.
The information contained herein is provided for informational and educational purposes only. The Nasdaq Private Market does not provide legal, tax, investment or financial advice. The Nasdaq Private Market, LLC is not: (a) a registered exchange under the Securities Exchange Act of 1934; (b) a registered investment advisor under the Investment Advisors Act of 1940; or (c) a financial or tax planner, and does not offer legal, financial, investment or tax advice to any user of the Nasdaq Private Market platform or services.
Securities-related services may be offered through NPM Securities, LLC, a registered broker-dealer and alternative trading system, which is a member FINRA/SIPC and wholly-owned subsidiary of the Nasdaq Private Market, LLC. Securities in transactions conducted through NPM Securities, LLC are not listed or traded on the Nasdaq Stock Market LLC, nor are the securities subject to the same listing or qualification standards applicable to securities listed or traded on the Nasdaq Stock Market LLC.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.