Private Capital Investing: All You Need to Know

Private Capital may be a broad label applied to any private investment fund that invests within the equity or debt securities of privately held companies, land, and other real assets. Introduction to non-public Capital will define the asset class, highlight key elements of the Private Capital investment experience, and discuss the advantages and risks of personal Capital investing. we’ll share our approach for choosing Private Capital investment strategies and managers and supply guidance for participation within the asset class. We believe our approach, combined with our lack of conflicts, positions our clients for a strong performance from exposure to the Private Capital asset class.

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Private Capital may be a dynamic investment practice during which quite a money is invested. Compared to investors’ publicly companies, Private Capital fund managers typically take away a more active role within the management of the businesses and assets during which they invest. Private Capital fund managers often contribute to business strategy and may play a neighborhood in directly managing assets. the last word goal is to make value by improving operations, strengthening the management team, fortifying the capital structure, and bolstering the strategic position of the businesses and assets during which they invest. To accomplish these objectives, Private Capital investment strategies are typically multiple years in duration.

Private Capital is usually considered to be a high-returning asset class that will enhance the general return and helps to smooth the performance of a well-diversified investment portfolio. Private Capital returns can exhibit a low correlation to returns from other asset classes, like stocks and bonds. Investors may consider Private Capital for some of their wealth which doesn’t require daily liquidity. These attributes of personal Capital accompany commensurate risks.

At any given time there is an overflow of one thousand Private Capital managers raising funds across numerous investment strategies and geographies. Recommending Private Capital investment opportunities involves navigating a posh world of potential conflicts that will influence an investment adviser. Manager selection bias, driven by embedded conflicts, may directly impact the recommendations an advisor offers to clients.

Our recommendations of funds that can be suitable for client portfolios are made without manager selection bias, as we’ve consciously found out our organization to be freed from the embedded conflicts an advisor faces in selecting Private Capital managers:

No fee sharing with any manager – if an analyst can only choose between managers which will share revenue with the wealth management platform, then many good managers are overlooked in the search.
No internally managed feeder funds with an additional layer of fees.
No management of proprietary funds – we don’t directly manage any Private Capital strategies, thus we aren’t biased to recommend our own strategies over others.
No investment banking teams promoting investment from wealth management clients to draw in investment banking clients.
No analyst compensation is linked to the extent of client investment in funds we recommend.
At Ascent Private Capital Management of U.S. Bank (?Ascent?), the inspiration of our Private Capital manager selection process is our Relative Value Assessment of worldwide Private Capital opportunities. We believe awareness and evaluation of cyclical and secular economic trends, additionally to intelligent manager selection, help drive long-term performance success privately Capital. Our team of personal Capital investment analysts searches the universe of personal Capital managers and methods for what we believe are the foremost compelling investment opportunities for clients, without manager selection bias.

The absence of conflicts in our manager selection process enables the foremost complete access to the Private Capital manager universe. Private Capital managers want to figure with Ascent clients for several reasons. Clients of Ascent are clients of U.S. Bank, which features a 120+ year history and today is that the nation’s 5th largest full-service bank. Ascent exclusively serves families with a net worth above $25 million and lots of families have a wealth of more than $100 million. Ascent clients are perceived as future investors, as they typically have multi-generational investment horizons measured in decades. Private Capital managers understand our interest in their fund to be without conflicts and purely investment-related, as we don’t propose to separate fees with the manager, form feeder funds to charge our clients for access, manage any competing strategies or staple our client’s interests to investment banking activities.

PRIVATE CAPITAL STRATEGIES

Private Capital investment strategies are numerous and diverse a la mode and geography. Private Capital fund managers generally consider a specific investment strategy during which the fund manager has significant experience. The three distinctive Private Capital asset groups each have a variety of investment strategies:

Private Equity strategies invest in equity and debt interests in privately held companies, starting from the primary funding of a startup to buyouts of multi-billion dollar companies.
Real Assets strategies acquire and manage land, production assets, and commodities.

Special Situations strategies pursue companies, assets, and owners of assets that have elements of distress or opportunities to participate as a minority investor.

The universe of personal Capital investment strategies is represented on the chart below. Detailed descriptions of every Private Capital investment strategy are located within the Appendix which follows this paper.

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