Is now the right time to consider Private Equity investments – Is it right for you or your client?

Written by: Stephanie Ingram, B. Comm, CPA, CA, Waverley Corp. Financial Services

Volatility in the markets have become the norm this year. Industry experts say we are nearing the top of a 10-year bull market. In fact, of 900 E-trade investors interviewed, 100 of them with investable assets over $1,000,000 expect we’ll see a recession in the next 12-18 months. Interestingly though, these wealthy individuals state they are not making any significant changes to their portfolio[1].

What choices do they have?

How about a 1-year GIC? If you’re prepared to commit to a 5-year CDIC GIC you might achieve a 3.6% annual rate of return[2]. How does that impact your long-term investment goals?

It is well-known amongst world leading economists and fund managers, that global economic activity is slowing, as a result of ongoing international trade wars, rising rates and a glut in oil supply. And let’s not forget the Trump-effect for added uncertainty.

Consider diversifying part of your portfolio with Private Equity investments, while managing risk.

The benefits of Private Equity investments, an alternative asset class, are numerous: they are less volatile, can produce much higher risk-adjusted-returns, and offer some capital preservation. What’s the catch? While these private equity investments offer diversification in your portfolio from public market volatility, you have to be willing to commit your capital for a 1-5 year period.

In Canada access to private equity investments was restricted to the very wealthy, institutions and pension funds. These investors have a 30-50% weighting of their investments in Private Equity & Real Estate (CPPIB[3] and OMERS 2017[4]). These types of investments are now accessible to a broader group of individual retail investors through the Offering Memorandum Exemption[5]

As a Dealing Representative at Waverley Corporate Financial Services, I represent various Private Equity issuers, in the Real Estate sector, that offer better returns, with better security and experience lower volatility, than the public securities. This is what we call “Risk-Adjusted-Returns”.

Investing a conservative portion of your portfolio in Private Equity maybe the most prudent investment decision you’ll make in the next 2-5 years. Learn how to increase your returns, with only a moderate increase in risk! Contact me at 416-949-6687 or singram@waverleycf.com, to learn if Private Equity investments are right for you or your client!

[1] https://www.cnbc.com/2018/11/18/more-wealthy-investors-see-the-end-of-the-bull-market-coming.html

 

[2] https://www.ratehub.ca/gics/best-gic-rates

 

[3] https://www.milliondollarjourney.com/comparing-the-asset-allocation-of-large-pension-funds.htm

 

[4] https://www.omers.com/About-OMERS/Annual-Reporting/Delivering-7-11-Net-Average-Annual-Investment-Ret/Asset-Allocation-and-Exposure

 

[5] http://blg.com/en/News-And-Publications/publication_4311